Banking money is more tempting than cutting losses. Destroying is much easier than creating. Starting a war is much simpler than ending it. The military adventure in the Persian Gulf is contemporary proof of this. Twists and turns are integral to the ongoing conflict and to the peace negotiations between the US, Israel, and Iran. Monday’s sharp drop in oil prices, triggered by President Trump’s Saturday announcement of an imminent negotiated deal, was partially reversed yesterday after the US reportedly conducted ‘defensive strikes’ on Iranian vessels and missile sites, prompting Iranian accusations that the US had violated the ceasefire agreement. It is no wonder, then, that the US Secretary of State now says that a few more days are needed to finalise whatever agreement is to be finalised.

And herein lies the uncertainty. It must be acknowledged that there has been palpable progress towards ending the crisis, and an increasing number of ships are transiting the critical chokepoint. This is why the downward pressure has resumed overnight and why the CME RBOB contract lost 16% in a little over a week. However, pivotal details, such as Iranian uranium enrichment, ownership of stockpiles, and control over the Strait of Hormuz, remain obscure. Regardless of the outcome, and we might be going out on a limb here, it feels as though there will be no winners (although both parties will undoubtedly declare victory), and any relative calm may prove transitory, fragile and permanently unenforceable. Nonetheless, there appears to be a growing determination to halt the war. Again, it is far from clear in what shape or form this will come, or when it will happen. Yet, it is worth assuming that the Strait will reopen in the foreseeable future. It will allow us to assess how the oil balance could change and how that would affect oil prices, something we plan to explore on Friday.

The Ubiquity of Electric Vehicles

Nothing is surprising about the fact that renewable energy, as well as coal, is currently in great demand. The simultaneous growth of these energy sources might have been unimaginable a few months ago, but today it is a palpable sign that energy security, once again at the forefront of the thinking of politicians and investors, overrides any other considerations one might hold. Whilst electricity generation is being stabilised by a return to the most polluting fossil fuel, coal, car users are increasingly preferring electric vehicles (EVs). As my colleague pointed out in yesterday’s note, drivers’ concerns about EV charging and range have been partially replaced by fears of petrol stations running out of fuel. It is worth reiterating the conclusion of the report, namely that oil will continue to play a salient role in the energy mix. Yet, there is growing evidence that the increasing popularity of EVs, although it might suffer occasional, possibly price-related, setbacks, is now an irreversible process, a view supported by the annual Global EV Outlook report published by the IEA last week.

The energy watchdog of the developed world observed that, even before the Persian Gulf conflict, electric car sales had jumped by 20% in 2025, exceeding 20 million units. This implies that 25% of new cars sold were electric. The current crisis and high oil price environment are accelerating this growth. Although sales declined in the first quarter in China and the US, predominantly due to policy changes, the IEA anticipates global electric car sales to increase to 23 million in 2026, equating to 28% of total car sales. Europe will account for the bulk of this growth, with sales expected to rise by 20%. Although sales growth in China will slow, electric cars will still account for almost 60% of total car sales there.

Trends in heavy-duty electric vehicles are a pivotal piece of the EV jigsaw puzzle. Global electric bus sales flirted with the 70,000 mark last year, representing an annual increase of 12%. This growth was chiefly supported by the expansion of depot charging infrastructure. China remained the bellwether for electric bus sales, although its share declined from 100% in 2018 to 60% in 2025, a testament to the efforts of other regions to increase adoption. Electric truck sales doubled last year and reached 9% of total global sales. The prevalence of heavy freight trucks is particularly eye-catching, as their sales nearly tripled year-on-year.

The two most obvious impediments to the widespread adoption of EVs are, as mentioned above, range and charging infrastructure. The IEA estimates that there have been developments on both fronts. EVs accounted for more than 70% of global battery deployment in 2025, reaching 1.3 terawatt-hours (TWh), an annual increase of 30% and a sevenfold rise since 2020. More than 85% of last year’s EV battery deployment occurred in the light-duty vehicle (LDV) segment, but the fastest growth was observed in electric trucks, particularly in China. Roughly 8% of total EV battery deployment took place in electric trucks.

The rollout of public charging infrastructure accelerated last year, reaching 7 million charging points worldwide. The annual increase amounted to 1.8 million charging points, equating to a growth of 33% compared with 2024. The number of electric LDVs per public charging point in 2025 remained the same as the previous year at 11, although it is noteworthy that charging times shortened by around 15%. The deployment of public charging points is key to improving access to EVs. Nevertheless, private LDV charging points reached 43 million in 2025, supporting around 76 million LDVs, according to the IEA.

The increase in the use of EVs, whether light-duty, heavy-duty, or electric buses, is unquestionable. It therefore has a tangible impact on global and regional gasoline and diesel demand. Global electricity consumption by EVs was estimated at around 250 TWh last year. In the Current Policies Scenario (CPS), electricity demand is projected to increase to 1,500 TWh by 2035, with the stock of EVs rising fourfold. In the Stated Policies Scenario (STEPS), demand will reach 1,700 TWh within nine years, whilst in the Net Zero Emissions by 2050 Scenario (NZE), electricity consumption by EVs will exceed 3,000 TWh. EVs displaced around 1.7 mbpd of oil demand in 2025. Given the growth of the EV sector, the IEA projects this displacement to rise to 9 mbpd by 2035 in the CPS, 10 mbpd in STEPS, and more than 15 mbpd in NZE. Advocates of energy security would probably argue, perhaps correctly, that these estimates are overzealous; nonetheless, the trend is clear.

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