The International Energy Agency is signaling a shift that could redefine energy markets for years to come: China’s oil demand is expected to peak by 2027, marking a major inflection point in global consumption patterns.
What the IEA is Telling Us
According to the IEA’s June 17, 2025 report, global oil demand is projected to continue growing until approximately 2029, reaching around 105.6 million barrels per day (bpd) before experiencing a modest downturn in 2030. Meanwhile, China—the world’s largest oil consumer—will reach its demand zenith by 2027, driven by accelerated uptake of electric vehicles (EVs), increased use of natural gas trucks, and expansive rail modernization.
By 2030, nearly 80% of new car sales in China could be electric, drastically reducing gasoline dependency.
Why This Matters
China has long been the engine of global oil demand growth. Its pivot away from fossil fuels signals:
- End of the Chinese consumption boom: That growth driver is shifting, reducing dependency on imported crude.
- Global demand plateau: Without China’s upward push, consumption growth stalls—leading to a supply surplus.
- Oil market rebalancing: Production capacity is set to surge—114.7 mbd by 2030—while demand plateaus, leading to prolonged oversupply.
Our Perspective
At Drill and Defense, we interpret this as more than an energy insight—it’s a strategic redirection. Some observations:
- Energy transition accelerates: China’s rapid EV and rail adoption validates long-term investment in clean infrastructure.
- Big Oil recalibrates: With global demand stagnating, oil majors will face increasing pressure to optimize, diversify, or downscale.
- Policy implications: Governments reliant on oil revenue must anticipate lower demand and diversify economies—especially petro-states.
- Market dynamics shift: We’re entering a period of moderate prices and stretched capital efficiency—fewer mega-projects, more optimization.
What to Watch Next
- EV penetration in Europe & North America: China’s lead may be a bellwether for other markets—but U.S. EV growth remains slower.
- China’s petrochemicals demand: As Crude for transport dips, industrial and chemical use may soften the drop—but only modestly.
- Investment redirection: Surplus capacity plus stagnant demand creates a fertile ground for renewables and energy storage capital opportunities.
- Geopolitical resilience: Even amid supply abundance, regional disruptions (e.g., Middle East tensions) can still spike volatility—investment strategies must stay agile.
We invite industry peers and energy professionals to reflect along these lines: How are your portfolios and policies shifting under a post-peak-demand scenario? Your insights—and foresight—will shape the next decade of global energy strategy.
Sources
- Reuters, “World oil demand to keep growing… despite 2027 China peak” (June 17, 2025)
- Axios, “Key agency sticks to its guns on peak oil demand” (June 17, 2025)
- The Times (via The Times UK), “China nears peak oil demand amid ‘extraordinary’ EV sales” (June 17, 2025)
- ScienceX/TechXplore, “Global oil demand to dip in 2030, first drop since COVID: IEA” (June 17, 2025)
- Economy Middle East, “Global oil demand to peak at 105.6 mbd by 2029, says IEA” (June 17, 2025)
