The growing popularity of electric vehicles in developing markets may have a negative impact on long-term oil demand

Developing countries, on average, spend up to 2 percent of GDP on crude oil imports. With the growth of the economies of these states, the dependence on the supply of hydrocarbons, the cost of which was quite high until recently, is also growing. However, in the last year, this argument has lost its force, since oil prices at the moment fell to zero, and now they are around $ 40 per barrel.

The only major oil-importing country which economy has already recovered from the effects of the coronavirus crisis and can have a stimulating effect on the hydrocarbon market is China. At the same time, China is also the world’s largest market for electric vehicles, whose popularity in the country is growing every year, including due to state programs aimed at reducing greenhouse gas emissions.

In addition, the cost of batteries suitable for use in electric vehicles is constantly decreasing, which makes this equipment more and more competitive in comparison with traditional transport, which has a favorable effect on sales. In turn, the growth of the electric vehicle fleet allows reducing emissions of harmful substances into the atmosphere and reducing dependence on imported hydrocarbons.