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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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High Oil Prices Could Fuel EV Adoption


As oil prices continue to rise and global demand is bouncing back to pre-pandemic levels, people could be buying into electric vehicles (EV) as an alternative to expensive fuel costs.  The International Energy Agency (IEA) says that rising oil prices are expected to encourage people to shift away from traditional vehicles and increase the uptake of EVs. However, this could be detrimental to the recovery of the global economy.

With oil prices hitting $77 a barrel this July, due to higher demand and OPEC+ production cuts aimed at raising the benchmark price of oil, the threat of ever-increasing fuel prices is worrying for consumers who are still overcoming the economic hit of the pandemic. 

The IEA stated of the situation, “While prices at these levels could increase the pace of electrification of the transport sector and help accelerate energy transitions, they could also put a drag on the economic recovery, particularly in emerging and developing countries.”

As the vaccination rollout is accelerating across the globe, restrictions are easing, and road and air travel are picking up over the summer months, global oil demand is expected to continue to rise throughout 2021, to hit pre-pandemic levels of 100 million bpd by 2022. In fact, in some areas of the world such as China and India, oil demand is expected to exceed pre-pandemic levels, as the oil need across the region will continue to rise over the next decade. 

The IEA has warned OPEC+ that if it does not reduce cuts to resume normal production across member states, in line with the global demand increase, this could lead to economic instability due to rising fuel prices worldwide. 

However, at present, production levels are being increased slower than expected by OPEC due to challenges in organizational talks, with disputes between the UAE and Saudi Arabia around production increase levels. OPEC+ is currently expected to increase production across member states by around 400,000 bpd in August.

Related: China Oil Imports Fall To Lowest In 2021

This report builds upon the Ernst & Young AI analysis from June that stated the EV boom is coming much earlier than anticipated, with EV sales expected to surpass those of traditional vehicles by 2033. Particularly as several countries across Europe, such as the U.K., are planning a ban on the sale of petrol and diesel vehicles from as early as 2030 as part of the clean energy transition. 

With many major companies backing EVs, with Amazon, the United States Postal Service, and United Airlines all announcing new EV fleets, while Ford, Volkswagen, and General Motors (GM) increase investments in EV production, electric vehicle and EV related stocks are set to soar this summer

And thanks to the sooner than expected uptake of EVs, greater production levels have a positive knock-on effect on other sectors, meaning mining for metals required for manufacturing looks promising. 

In the longer term, copper demand is expected to increase from around 300,000 t in 2020 to over 4 Mt in 2040. In addition, the battery production industry will account for 60 percent of nickel demand through 2040.

As mining for minerals vital for EV production is set to increase, several companies turn their investments inwards in an attempt to meet green policy expectations. For example, GM announced a partnership with Controlled Thermal Resources this month, to source lower-cost lithium from within the U.S. for use in its EV batteries. They hope the use of American lithium will increase job opportunities and reduce their carbon footprint. 


With the EV boom looming and ever-increasing oil prices set to add to the shift in consumer demand, it is only a matter of time until customers move away from petrol and diesel vehicles to cheaper-to-run electric alternatives. And as the EV market soars so shall its stocks, as well as those of minerals vital for EV components. 

By Felicity Bradstock for Oilprice.com

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  • Mamdouh Salameh on July 17 2021 said:
    If very generous government subsidies, government legislations and extensive media hype have failed to accelerate electric vehicles’ (EVs) adoption, I don’t think rising crude oil prices will do the trick. The reason is that the rise in electricity costs is normally faster than crude oil prices.

    There are currently 2 billion internal combustion engines (ICEs) on the roads worldwide compared with 10.9 million EVs or 0.55% of the total according to US Auto Research.

    And yet, there is extraordinary hype about EVs by the media. But when Akio Toyoda, the President of Toyota, the world’s biggest car company, says there is too much hype surrounding EVs and also notes that the electricity needed to charge EVs would strain grids and increase carbon emissions, the world should listen attentively.

    The ease of charging and also the availability of charging points are always on EV drivers’ minds particularly when they are embarking on a long journey of hundreds of miles. Therefore, it is not surprising that 18% of EV drivers and 20% of plug-in buyers in California are switching back to gasoline cars. There will be a need for some 300 million charging points by 2040 needing estimated cumulative investment of over $589 billion in the next two decades.

    This is one very major reason why EVs will never prevail over ICEs. The other is the need for global expansion of electricity generation costing trillions of dollars to charge the supposedly millions of EVs that will be on the roads. How would this expansion be sourced: by solar, nuclear or hydrocarbons?

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Alan Dr on July 17 2021 said:
    First we have to note that despite the vaccination rollout in the world, the number of infections are exploding again and in various parts of the world new lockdowns and travel restrictions are implemented. This might result this year in another dip in oil sales.

    Second is that many seem to be under the impression that EV sales have to exceed ICE sales to affect oil demand growth. When a 100 ICE cars are sold then they replace say 75 old ICE cars (that are scrapped, especially in saturated markets) and only 25 are actually added to the world total amount of cars. It is this number that has to be reached by EV’s to stop all oil demand growth in this sector.

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