{"id":1213,"date":"2026-06-04T19:33:50","date_gmt":"2026-06-04T19:33:50","guid":{"rendered":"https:\/\/arizonamovinginsider.com\/?p=1213"},"modified":"2026-06-04T19:33:50","modified_gmt":"2026-06-04T19:33:50","slug":"did-the-iran-war-force-peak-oil-a-look-at-demand-prices-and-international-use","status":"publish","type":"post","link":"https:\/\/arizonamovinginsider.com\/?p=1213","title":{"rendered":"Did the Iran war force peak oil? A look at demand, prices and international use"},"content":{"rendered":"
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Something weird is happening in China.<\/p>\n

Chinese demand for oil has tumbled 9% from before the Iran war, according to JPMorgan. That\u2019s the stuff of economic nightmares. For context, global oil demand fell 2% during the 2008 Great Recession.<\/p>\n

Read more Family of Rachel Hansen seeks answers 4 years after unsolved murder<\/a><\/p>\n

But China isn\u2019t close to economic collapse.<\/p>\n

Despite the largest energy supply shock the world has ever seen \u2026 despite the fact that China imports 70% of its oil \u2026 despite China\u2019s status as Iran\u2019s No. 1 oil customer \u2026 the oil situation in China seems, well, fine.<\/p>\n

China accomplished that drop in demand not through some government-mandated effort to conserve fuel, but through rapid changes in consumer behavior. Chinese consumers have traded in gas-guzzling cars for electric vehicles and public transportation and switched international travel for nearby destinations.<\/p>\n

It\u2019s happening elsewhere in the world, too. Some of those choices have already led to permanent changes in oil demand \u2013 even when the Strait of Hormuz reopens.<\/p>\n

In other words: We may have already hit peak oil \u2013 the point at which the world starts to wean itself off crude, never to return to its previous highs.<\/p>\n

What\u2019s going on in China?<\/h2>\n

China insulated itself from the oil shortfalls and rationing of neighboring countries in large part because of its mammoth crude stockpiles \u2013 prescient fuel warehousing that the government built up well before the war broke out.<\/p>\n

But that\u2019s just a temporary fix. The more significant shift is permanent: Chinese consumers took a hard look at rising gas prices, said nuts to this and went electric.<\/p>\n

For the beginning of the five-day May Day holiday, EV charging on China\u2019s highways surged 55.6% over the previous year, according to China\u2019s Ministry of Transport. Over the course of the holiday, just under a quarter of cars traveling on China\u2019s highways were EVs \u2013 up 33% from a year earlier.<\/p>\n

Meanwhile, consumer air travel for May Day fell 5.7%. But that decline in flights was largely because of a big drop in international trips. Regional flights were up 3.5%. Rail trips rose 4.6% for the holiday.<\/p>\n

A similar situation is unfolding in Europe: New car registrations are at a seven-year high, led by hybrid vehicle sales, according to JPMorgan. EVs have become even more affordable because European electricity prices are falling \u2013 thanks to massive investments in wind and solar over the past decade.<\/p>\n

That\u2019s certainly not the case everywhere. EV sales have not meaningfully risen in the United States after congressional Republicans, supported by President Donald Trump, stripped away government-backed incentives to buy EVs.<\/p>\n

But permanent declines in oil usage, even just from some sectors across two major economies, could dent demand enough that it never fully recovers, according to Natasha Kaneva, head of commodities strategy at JPMorgan.<\/p>\n

\u201cHistory suggests that past oil shocks often left lasting declines in gasoline demand, and this episode may prove no different,\u201d she said.<\/p>\n

Lessons from 1973<\/h2>\n

The world adapted to the last Iranian oil crisis \u2013 the 1973 oil embargo \u2013 in remarkable and permanent ways.<\/p>\n

Countries banded together to form the International Energy Agency, which coordinated and held member countries accountable for reducing their reliance on oil. The number of nuclear power plants rose sharply over the course of the decade, as did public transit options and new efficiency standards for vehicles and home insulation.<\/p>\n

Read more Alabama family pleads for return of son missing on family trip in Japan<\/a><\/p>\n

The United States and other nations built strategic petroleum reserves. The US Congress established the Department of Energy and reduced the national speed limit to 55 miles per hour.<\/p>\n

The 1970s marked the largest reduction in fossil fuel demand in US history.<\/p>\n

\u201cIt was a sort of collective shock to the American system that did drive policymakers to push oil out,\u201d said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University.<\/p>\n

Other crises also led to permanent changes. The pandemic, for example, made telecommuting normal, permanently reducing the number of commuters \u2013 and the need for physical office space.<\/p>\n

Similarly, following Russia\u2019s 2022 invasion of Ukraine, the European Union created regulations that sharply reduced its dependence on natural gas in favor of renewable sources.<\/p>\n

What demand destruction could look like<\/h2>\n

The Iran war has significantly reduced global demand for oil: In March, demand fell by 2.8 million barrels per day. In April it was 4.3 million barrels per day. In May, 5.6 million.<\/p>\n

We\u2019re not quite at the pandemic\u2019s 10 million barrel-per-day demand loss. But we\u2019re getting closer.<\/p>\n

Much of that will come back. Not all of it.<\/p>\n

The IEA expects demand will average 418,000 fewer barrels of oil and refined products each day by year-end. Of the 180,000 barrels per day of gasoline demand that evaporated from the Chinese market, 70% won\u2019t come back \u2013 ever, JPMorgan predicted.<\/p>\n

\u201cOnce consumers switch to EVs, the change tends to be sticky,\u201d Kaneva said.<\/p>\n

It\u2019s not clear when the strait will reopen. The longer the closure lasts, the more permanent many of the changes will be.<\/p>\n

\u201cPast supply shocks and wars have taught households and businesses lessons that they won\u2019t soon forget,\u201d said Joe Brusuelas, chief economist at RSM US. \u201cWe\u2019re in the midst of adjusting to this in real time.\u201d<\/p>\n

Why it might bounce back<\/h2>\n

Still, the world\u2019s thirst for oil can\u2019t be overstated. Factories, electric plants, plastics manufacturers\u2026 they all need crude. Oil\u2019s not going anywhere.<\/p>\n

That\u2019s why oil demand is inelastic in the short term, noted Alan Gelder, head of refining, chemicals and oil markets research at Wood Mackenzie. Whenever the strait reopens, the equipment that depended on oil largely won\u2019t have changed and will need to be fueled again \u2013 with fossil fuels.<\/p>\n

And part of the permanent demand destruction will be negated over the next couple years by countries that want to refill their strategic petroleum reserves once the strait opens \u2013 adding more than 1 million barrels per day in demand through 2028, according to Dan Pickering, founder and chief investment officer at Pickering Energy Partners.<\/p>\n

It may not be until afterward \u2013 perhaps not until the next decade \u2013 that those consumer changes will appear in the oil market data.<\/p>\n

But permanent means forever. If people make those changes, they\u2019ll show up in the economy \u2013 eventually.<\/p>\n

Read more Everest cleaning crew discovers crawling Sherpa in stunning survival story<\/a><\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

\u201cHistory suggests that past oil shocks often left lasting declines in gasoline demand, and this episode may prove no different,\u201d said Natasha Kaneva, head of commodities strategy at JPMorgan.<\/p>\n","protected":false},"author":1,"featured_media":1212,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[],"class_list":["post-1213","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-national-news"],"yoast_head":"\nDid the Iran war force peak oil? 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