Wood Mackenzie Lifts Global EV Fleet Share Forecast to 25% by 2040 on Hormuz Fuel Price Signal
Sustained crude prices above $100 since Iran's Hormuz closure have prompted Wood Mackenzie to revise its long-run EV adoption base case sharply upward.
Wood Mackenzie's analysts now expect EVs to reach 25% of the global passenger fleet by 2040, up from 4% in August 2026, a revision the consultancy attributes directly to fuel price signals generated by the Hormuz supply disruption — a shift that carries material implications for long-run oil demand and refinery economics.7
ICE Brent crude front-month settled at $104.32 a barrel at September 13's close, with Dubai crude at $114.91, as the price signal from the worst oil supply disruption in recent decades embedded itself into consumer behaviour faster than pre-crisis models assumed.7
Under Wood Mackenzie's "Electric Shock" scenario, global oil demand could fall to roughly 99 million barrels per day by 2040 — approximately 5 million b/d below the consultancy's base case — if fuel-price signals continue to accelerate consumer and policy responses beyond current assumptions.7
The scale of the supply shock is the reason those prices have proved sticky. Iran announced the closure of the Strait of Hormuz on February 28 (2026-02-28), cutting off a waterway that in 2025 carried approximately 18.2 million b/d of crude oil and refined products — roughly one-quarter of worldwide seaborne oil trade and about one-fifth of global LNG trade, according to OGJ.5,3
The IEA estimates global oil supply has fallen by 12.8 million b/d since the conflict began, with an additional 1.8 million b/d decline month-over-month in April alone, OGJ reported. EIA estimates put Middle East production shut-ins at an average of 10.5 million b/d in April, rising to a projected peak of nearly 10.8 million b/d in May as storage reached capacity. OPEC+ output slid 1.9 million b/d to 40.1 million b/d in April, leaving production 11.9 million b/d below pre-war levels.5
Asian economies absorbed the most direct exposure, accounting for nearly 80% of Hormuz oil flows before the disruption, according to OGJ. China alone imported close to 5 million b/d through the strait; India, Japan, and South Korea each moved roughly 2 million b/d. Transit volumes did not collapse entirely — Reuters reported on May 28 (2026-05-28), citing Kpler and LSEG data, that two supertankers and an LNG carrier had cleared the strait during the week of May 25 (2026-05-25) — but by early July, S&P Global Commodities at Sea recorded only 73 vessel crossings over a tracked period ending July 12 (2026-07-12), fewer than 25 per day on average.5,1,6
India's exposure has been acute. The Atlantic Council reported on June 5 (2026-06-05) that India's crude basket surged from $69 per barrel before the conflict to above $114 in April, a direct consequence of the country's dependence on Gulf supply routed through a single maritime passage.4
Crude did pull back from earlier peaks. WTI fell as low as $88.68 and ICE Brent briefly dropped below $95 on May 28 (2026-05-28), when traders priced in a possible diplomatic framework between the United States and Iran, Gulf News reported. Energy analysts said traders were balancing optimism over possible diplomatic progress against concern about depleted inventories, damaged infrastructure, and lasting geopolitical uncertainty across the Middle East. But Brent has since recovered to $104.32, and sustained elevated prices have already shifted consumer purchasing patterns.2
China is best placed to lead the EV response. Wood Mackenzie noted that under the Electric Shock scenario, additional Chinese policy measures — including new restrictions on gasoline consumption and full purchase tax exemptions for EVs — could fast-track adoption well beyond current trajectories. China's roughly 5 million b/d Hormuz import exposure gives Beijing a direct financial incentive to push the transition faster than existing targets require.7,5
The IEA's annual EV report, published August 20 (2026-08-20), projected that electric vehicles could account for nearly 30% of all global car sales this year, as drivers accelerate a shift to EVs and hybrids amid elevated fuel prices following the Iran conflict.7
Wood Mackenzie analysts estimated that deceleration in road transport fuel demand could lead to the early closure of roughly 40 oil refineries worldwide — a consequence the consultancy sees materialising even if Hormuz fully normalises. Whether Beijing moves on purchase tax exemptions and gasoline consumption caps on the timeline Wood Mackenzie outlined will set the pace at which global demand diverges from what refiners and producers have built their planning assumptions around.7