Global oil market prices are on the brink of major fall by 2030, because of the inroads made by electric vehicles (EV) and growing renewable energy use.
As EVs, renewable energy, and shifting global trade patterns influence demand, oil supply is expected to outpace consumption in five years.
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| The demand for oil could fall substantially and supply may increase -- Photo: UL Solutions. |
This seismic shift, outlined in the International Energy Agency’s (IEA) Oil 2025 outlook, signals the end of oil’s dominance in energy markets.
Oil supply to outpace demand by 2030 because of EVs
According to the IEA, global oil demand is still projected to increase by 2.5 million barrels per day (mb/d) by 2030.
However, this growth is expected to slow significantly after 2026, with demand plateauing and eventually declining by 2030.
The reason behind this change is the rising adoption of EVs, which are gradually replacing traditional oil-powered cars and disrupting the global oil demand cycle.
The EV revolution | Driving oil demand down
The surge in EV adoption is the primary force behind the shift in oil markets. By 2025, global EV sales are set to surpass 20 million units.
By 2030, EVs are expected to cut oil demand by 5.4 mb/d. This reduction will have a major impact on countries heavily dependent on oil, such as Saudi Arabia.
With oil-fired power plants gradually transitioning to natural gas and renewable sources, oil consumption in transportation is expected to decline.
EVs are transforming the automotive industry not only due to environmental reasons but also because of economic benefits.
With falling battery costs, improved vehicle range, and government incentives, switching to EVs has become an attractive option for both consumers and automakers.
Petrochemicals to be new focus for oil sector
While oil consumption in transportation is set to decrease, its demand in other sectors, particularly petrochemicals, is on the rise.
By 2030, around 16 per cent of global oil will be used to produce petrochemicals like plastics and synthetic fibres.
As a result, production of natural gas liquids (NGLs) is increasing, with countries like China and the United States leading the charge.
This shift is transforming the oil economy, with lighter and more versatile fuels gaining prominence.
However, this trend poses challenges for traditional refineries, which may face oversupply and higher costs, particularly in Europe.
The growing oil supply
Despite slowing demand, global oil supply is expected to rise by more than 5 mb/d, reaching 114.7 mb/d by 2030.
This growth will primarily come from the Americas and West Asia, in countries like Saudi Arabia and Iraq.
However, as supply continues to grow, there is increasing pressure on refineries, particularly those in high-cost regions.
As a result, some refineries may need to invest in green hydrogen and energy-efficient upgrades to remain competitive or shut shop.
Challenges for traditional fuel sectors
The global shift away from oil extends beyond passenger cars.
The shipping industry is also feeling the pinch of rising carbon rules, particularly in the European Union, where the cost of petroleum-based marine fuels is climbing.
As freight companies look to cut emissions and reduce fuel costs, the demand for traditional marine fuels is shrinking.
E-Vroooom’s views
Oil’s future | Flexibility and low-carbon investment
As the world moves towards a more diversified energy mix, the future of oil will rely on flexibility.
The IEA’s outlook emphasises that investment in low-carbon technologies and diversifying energy portfolios will be crucial for navigating the changing energy landscape.
As EVs, renewables, and new energy sources dominate, oil may not disappear entirely, but its role in global energy markets will be significantly altered by 2030, and as a result prices could plummet.
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