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Illustration: Aïda Amer/Axios
Analysts are starting to wonder if the world needs less oil than what's commonly believed, Axios' Emily Peck reports.
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Retail prices for gas and diesel are both up around 30% globally year over year amid the Iran war, Goldman Sachs analysts said in a recent note.
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As a result, demand is dropping fast for gas, diesel, jet fuel and petrochemicals.
📉 Economists expected that "demand destruction" to trigger a big economic slowdown. But it hasn't — at least not yet.
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That's partly because consumers have new ways to shift away from oil.
🚙 For example: People are switching to electric vehicles in Europe and (especially) China.
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That's less true in the U.S., after the Trump administration stopped pushing EVs and renewables.
🇨🇳 JPMorgan analysts wrote in a research note last week:
- "We spent last week in China, and the most striking takeaway ... was not simply that oil demand has fallen. It was that it may have dropped by as much as 9% ... abruptly, unexpectedly and with remarkably little visible disruption."
⛽️ Between the lines: Today's energy system was built after the 1973 oil crisis, which convinced countries and businesses to improve fuel efficiency.
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Today's crisis could spark an even more radical shift, with the Iran war leading to "the steady decoupling of economic activity from oil consumption itself," the JPMorgan analysts wrote.
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