Demand for petrol has peaked, says the global forecaster

The prediction comes as carmakers recently spun to boost their EV fleet, after years of skepticism in the industry as to whether car buyers would ever fully accept electric models. General Motors Co. said it would no longer sell with gas-powered vehicles by 2035. Volvo Cars of Sweden has said it will be fully electric by 2030.

The IEA had 60 million electric vehicles on its roads by 2026, rising from 7.2 million in 2019. The agency is closely monitoring EV trends as a key signal for demand for petrol and crude oil.

The shift towards electric vehicles has been driven by government regulation, solid incentives in developed countries and broader consumer acceptance of the technology, thanks in part to popular models such as those sold by Tesla. Inc.

EVs still make up a small part of the global fleet, and automakers say they are expected to see demand for gas-burning engines grow, especially in the developing world, in the coming years.

The forecast comes at a time when the pandemic is increasing global fuel consumption, raising questions about whether it will change the world’s energy mix more generally in the coming years. Energy watchers have been debating for years the timing of the so-called peak oil, a point at which the demand for crude oil will begin to decline. Amid the pandemic that began last year, some forecasters, including those from the Organization of the Petroleum Exporting Countries, said the day may have already arrived in the developed world.

The IEA said on Wednesday it sees global crude demand recovering and reaching 20 million barrels a day daily by 2026, which is about 4% higher thanks to the developing world than in 2019. Economic power stations such as China, India and other Asian countries countries will account for 90% of the net increase in oil demand over the next five years, the agency said.

But for the first time, the agency said it no longer predicts a complete setback in gasoline demand – the product that has been quenching its thirst for crude oil for years.

“We do not think petrol consumption will return to the 2019 level,” said Fatih Birol, executive director of the IEA. Meanwhile, global demand for jet fuel will not recover to pre-pandemic levels until 2024, the agency said.

Amid widespread government restrictions on coronavirus travel, the IEA said daily demand for petrol fell by a record 2.9 million barrels in 2020, by more than 10% of the 26.6 million barrels per day burned in 2019.

Recording EVs is not the only thing that is lowering the demand. The IEA and the US Department of Energy referred in a report last month to the improved fuel efficiency of gas-burning cars. The US agency said US petrol consumption in the transportation sector would peak in 2022.

The IEA has said that global demand for petrol will start to return as economies reopen. But the shift to EVs in richer countries is now accelerating at such a pace that the demand shortages are greater than the expected growth of developing countries such as Indonesia, India and China.

Global plug-in electric vehicles accounted for about 4.2% of new car sales last year, with sales rising 43% to 3.24 million vehicles, according to ev-volumes.com, a research group that monitors EV sales . In Europe, where vehicle sales are booming, 10.5% of new cars were sold in the fourth quarter of 2020.

“E-mobility has won the race,” Volkswagen CEO Herbert Diess told reporters this week as he unveiled major new investments in car battery factories and electric charging stations.

Mr. Diess says that by 2030, battery-electric vehicles will account for 50% of Volkswagen’s new car sales worldwide. He said conventional internal combustion engines would still dominate in some markets.

“We will sell ICEs longer in some regions than in others,” he said. “E-mobility worldwide will be at different levels of speed, depending on local policies and the provision of CO2-free energy.”

Write to David Hodari at [email protected] and William Boston at [email protected]