50% of OECD oil demand comes from road transport. As the percentage of EVs in the car/light truck fleet rises, that sector of demand will dwindle. By 2035 it will have disappeared completely.
(The OECD represents developed countries, and excludes China. However, demand for oil for transport is going to plunge in China too.)
With demand sliding faster every year, the only way for oil producers to keep the oil price up is to constrain supply. But that's not a long term cure. If you are like Saudi Arabia, with vast supplies and a low cost of production, it would make sense to sell as much as possible as soon as possible, before demand runs out, and you are left with a slew of stranded assets and unsellable reserves. If, on the other hand, you have limited supply, and a high cost of production, you will also want to sell as much as possible as soon as possible, because when the oil price starts to fall, you'll be unable to produce it profitably.
So the current supply constraint is almost certainly temporary and unsustainable. Peak oil is imminent.
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| Source: Statista |
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