China’s demand for oil will peak within two years thanks to its unexpectedly “breakneck” switch to electric vehicles, the International Energy Agency has predicted.

American oil demand will, however, be higher than expected this decade as momentum for EVs in the United States wanes, the agency said.

As a result, global demand for oil is still expected to peak in 2029, with ample production available to leave the market “well-supplied in the years ahead”, the IEA forecast. The Paris-based IEA advises industrialised countries on energy markets.

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In a report it said that an “extraordinary” surge in EV sales in China, the adoption of trucks running on gas and the expansion of the country’s high-speed rail network were already eroding its demand for oil for road transport.

Having driven global oil demand growth for the past decade, China will now require only fractionally increased volumes over the next two years to supply its petrochemicals sector. Chinese oil demand will then start declining in 2028, according to the IEA’s projections. By 2030 it now sees China’s oil demand at an “almost negligible” 30,000 barrels per day above 2024 levels, compared with an increase of about one million barrels per day it had been projecting last year.“This downward adjustment mainly reflects EV sales charging ahead at breakneck speed, eclipsing last year’s assumed pace, driven by new policy initiatives introduced to hasten the uptake of EVs as part of the country’s wider economic stimulus measures announced in 2024,” the IEA said. Almost half of Chinese cars sold last year were electric and the IEA sees this increasing to 80 per cent by 2030. The projections constitute “a sea change compared to the preceding decade when the country accounted for 60 per cent of the global rise in oil demand”. The revised forecasts for China stand in direct contrast to those for the United States, where the IEA has been forced to revise up its oil demand forecasts for 2030 by 1.1 million barrels per day because of a “significant loss of projected momentum in EV adoption” and lower petrol prices. The IEA has slashed its forecast for EV sales to a fifth of total car sales in 2030, down from 55 per cent it assumed last year.• Business live blog, Tuesday June 17 — as it happenedElsewhere, Saudi Arabia sees the biggest drop in oil demand of any country as it cleans up its electricity sector, switching from burning oil to burning natural gas and using renewable power. The changes to the IEA’s forecasts largely cancel each other out to leave global oil demand forecasts little changed, with a peak in sight in 2029 at about 105.6 million barrels per day. Global production capacity is forecast to rise to 114.7 million barrels per day by 2030, leaving ample spare capacity.Fatih Birol, the IEA’s executive director, said: “Based on the fundamentals, oil markets look set to be well supplied in the years ahead, but recent events sharply highlight the significant geopolitical risks to oil supply security.”Oil prices jumped on Friday after Israel’s strikes on Iran, on fears that Tehran could block oil tankers through the Strait of Hormuz, a crucial shipping route. Prices have since receded on hopes the conflict will be contained.In its monthly oil market report, the IEA reiterated that markets look “well supplied” this year, assuming no major disruption as a result of the Iran-Israel conflict, with stockpiles rising as supplies exceed demand.