Key Takeaways
- The Milestone: For the first time in history, global demand for all three fossil fuels (oil, gas, coal) has peaked before 2030, marking the end of the “Hydrocarbon Century.”
- The Driver: China’s massive pivot to EVs and solar is the primary cause. As the world’s biggest energy consumer shifts, the global market follows.
- The Consequence: We are entering the “Undulating Plateau”—a period of stagnant demand and volatile prices as producers fight for market share in a shrinking pie.
Introduction
“Peak Oil” used to mean the day we ran out of oil. Now, it means the day we stop wanting it.
According to the International Energy Agency’s (IEA) late 2025 report, that day has arrived.
Despite growing economies in India and Africa, the efficiency gains in the West and the rapid electrification of China have created a ceiling. We aren’t going to stop using oil tomorrow—demand will remain high for decades—but we will likely never use more than we did in 2024. This is a fundamental shift in the global economy.
The China Factor: The Dragon Goes Green
China is the story. For twenty years, China’s insatiable appetite for energy drove global commodity supercycles. Now, that engine has reversed.
- EV Dominance: In 2025, 50% of all new cars sold in China were NEVs (New Energy Vehicles). This displaced 1.5 million barrels of oil demand per day.
- Renewable Blitz: China installed more solar panels in 2024 alone than the US has in its entire history.
- The Result: When the world’s factory goes green, the demand for coal (for power) and oil (for transport) collapses. China’s coal demand peaked in 2023, and its oil demand is peaking right now.
Regional Breakdown: A Tale of Two Worlds
While the global average is flattening, the picture varies wildly by region.
The Decline: OECD & China
In North America and Europe, demand is in structural decline. Fuel efficiency standards, EV adoption, and heat pump installations are shaving 2-3% off fossil fuel demand annually.
- US Gasoline: Demand is down 15% from its 2019 peak, a trend that is accelerating as the EV fleet turnover hits critical mass.
The Growth: India & Southeast Asia
India is the new driver of energy demand. However, unlike China’s rise in the 2000s, India is “leapfrogging.” They are building coal plants, yes, but they are also deploying solar at a record pace. The growth here is dampening the decline elsewhere, but it’s not enough to push the global total to new highs.
Economic Shockwaves
This transition isn’t just environmental; it’s geopolitical and financial.
1. The “Undulating Plateau”
We aren’t falling off a cliff. We are entering a long plateau. Demand might dip one year and rise the next, but the trend line is flat. This makes investment decisions incredibly difficult for oil majors.
- Exxon & Chevron: They are pivoting to “advantaged barrels”—low-cost, low-carbon production (like the Permian Basin) that can remain profitable even if oil drops to $50/barrel.
2. Petrostates on the Clock
Countries reliant on oil revenue (Russia, Saudi Arabia, Nigeria) face a “ticking clock.” The Saudi Vision 2030 isn’t just a vanity project; it’s a survival strategy. If demand falls faster than expected, we could see a “price war” as producers flood the market to monetize their reserves before they become worthless.
3. Stranded Assets
Trillions of dollars in potential oil exploration projects are now at risk of becoming “stranded assets.” If demand falls, high-cost projects (like Arctic drilling or Canadian oil sands) will never turn a profit. Investors are already pricing this in, demanding higher dividends today rather than growth tomorrow.
The Long Tail
The decline will be slow. We will be burning oil for plastics, aviation, and shipping for decades. But the era of growth is over. The energy transition has moved from the “beginning” to the “mid-game.” The question is no longer if we will transition, but how fast—and who gets left behind.