China's EV Fleet Erodes the Strait of Hormuz's Demand Leverage
An IEA forecast of 4 million b/d in Chinese demand removal by 2035 reframes the disruption arithmetic around oil's busiest chokepoint.
The IEA now expects China's electric vehicle fleet to remove more than 4 million barrels per day from the country's oil demand by 2035, under both its current-policy and stated-policy scenarios. Set against the Strait of Hormuz, where EIA data show 21 million b/d transited in 2022 and accounted for roughly 21% of global petroleum liquids consumption, that projection reshapes the long-run disruption arithmetic for oil's most-trafficked chokepoint.7,1
Eighty-two percent of the crude oil and condensate moving through Hormuz in 2022 was bound for Asian markets, with China the dominant buyer. Each cohort of EVs sold reduces the barrels China requires from Gulf exporters, and the displacement compounds over years as those vehicles stay on the road. Cars sold this year will still be displacing fuel well into the 2030s.1,7
Iran announced the closure of the Strait of Hormuz on February 28 (2026-02-28) as conflict escalated in West Asia. The anticipated price shock did not arrive at the scale many forecast. Moneycontrol reported that some analysts had projected Brent reaching $200 per barrel; ICE Brent crude front-month traded at $78.95 per barrel on Wednesday (2026-08-05), well short of that.4,2
But China's demand behavior accounts for much of the gap. The country entered the crisis with larger strategic buffers than India or Taiwan, and its retreat from spot purchases helped cap prices, Moneycontrol reported. EVs add a longer-running force: fuel displacement accumulates with each year as earlier sales cohorts remain in service, lowering the demand baseline against which any supply shock registers.4,57
China's response to Hormuz exposure extends to gas. Its state LNG importers have sharply cut Persian Gulf supply in the months since the closure. In the second quarter of this year (April to June 2026), China took only about 100,000 tons of LNG from Qatar, compared with 4.7 million tons in the same quarter a year earlier, according to ship-tracking data compiled by Bloomberg. Qatar had supplied nearly 30% of China's LNG last year.6
PetroChina and Sinopec are in talks with exporters that do not rely on the strait for potential long-term deliveries starting before 2030 and running for at least ten years, sources told Bloomberg. If those contracts close, they would anchor supply routes well clear of the Persian Gulf across the next decade.6
India's position is more constrained. The country sources more than 85% of its oil from overseas, and about 40% of crude supply still transited the strait in 2024, down from roughly 50% in 2022 as purchases of discounted Russian crude rose. China's economic buffers going into the crisis were considerably larger, News18 analysis noted; India lacks comparable reserve depth and has no equivalent demand-side offset from EVs.5
Producer-side bypass capacity provides only partial cover. EIA estimates roughly 3.5 million b/d of effective unused pipeline capacity could route around the strait in a disruption, drawing on Saudi Aramco's East-West crude pipeline (temporarily expanded to 7 million b/d in 2019 from its rated 5 million b/d) and the UAE's 1.5 million b/d link to the Fujairah terminal. Against 21 million b/d of normal transit, that falls well short.1
Near-term prices depend on the ceasefire. US President Donald Trump said he was weighing a final determination on extending the Iran ceasefire and reopening the strait, Indian Express reported on May 29 (2026-05-29). A breakdown would move JKM and Gulf crude differentials sharply before the IEA's projected demand erosion makes itself felt in traded volumes — the EV math plays out over years, not the weeks in which a diplomatic outcome will be known.3,7