Goldman Sachs claims China-led EV surge could cut oil demand by 2027

U.S. banking giant, Goldman Sachs, is projecting that rapid electric vehicle adoption, majorly due to higher fuel costs tied to disruptions near the Strait of Hormuz and the US-Iran war, could reduce global oil demand by up to 320,000 barrels per day by the end of 2027.

In a research note published on Sunday June 21, the top investment bank mentioned two different scenarios that end up at the same conclusion. In the “Persistent Acceleration” scenario, where EV market share is expected to grow at the pace seen from February to May 2026, the demand reduction is projected at 0.32 million barrels per day by December 2027. In the more conservative “Temporary Acceleration” scenario, where regional EV adoption rates hold flat at May 2026 levels, production still hits a 130,000 barrel-per-day drop over the same period.

China at the forefront of the EV shift

China accounts for more than 60% of the recent rise in global EV market share, according to Yahoo Finance, with a consistently increasing penetration rate since February. Globally, EV sales reached 26.1% of all new passenger car purchases in May, up 3.4 percentage points over three months, the second-highest level on record.

The trend extends well beyond passenger cars, with Goldman Sachs’ analysts noting that two- and three-wheeled electric vehicles make up the majority of EV sales in India, Vietnam, and China, and each of these displaces about one-third to half the fuel that a passenger car EV would.

This multiplier effect amplifies the demand impact in markets and geographical areas where motorized two-wheelers are the dominant form of transport.

Twelve of the world’s 15 largest EV markets recorded rising adoption rates during the February-to-May period, according to Global Banking & Finance Review.

Goldman Sachs claims oil prices show weaker demand

The EV analysis runs concurrently with signs that fuel consumption is dropping faster than the crude oil markets anticipated.

Goldman Sachs analyst Alexandra Paulus said elevated fuel prices linked to Hormuz supply disruptions likely pushed consumers more toward electric vehicles, a dynamic particularly of weight in China where gasoline demand has weakened as the volume of EVs charging recorded a climb, Yahoo Finance reported.

Separate Goldman Sachs research published earlier this month found that actual retail-use oil demand may have dropped more sharply in response to the higher prices than previously expected.

Retail gasoline sales in China fell by more than 20% from last year’s figures in April, consistent with the lower output from refineries and increased use of rail. Western Europe also saw an average 8% decline in annual retail car-fuel volumes in the same month.

Goldman Sachs has now tied these crude oil demand pressures to a potential slide in Brent crude into the mid-$50s per barrel by late 2027. The bank currently predicts Brent could average $90 a barrel in Q4 2026, but sees a roughly $10-per-barrel drop if demand weakness in China and Europe persists.

The International Energy Agency projects EVs will account for half of all new car sales globally by 2035, even without additional government support, according to Yahoo Finance. Last year, one in four new vehicles sold worldwide was electric.

If you're reading this, you’re already ahead. Stay there with our newsletter.