"EV Sales Acceleration Poses Downside Risk to Global Oil Demand" – Daan Struyven, Goldman Sachs

Today we were thrilled to welcome back Daan Struyven, Co-Head of Global Commodities Research and Managing Director, Head of Oil Research at Goldman Sachs. Daan joined Goldman in 2015 and previously co-led Goldman Sachs' Global Economics team as well as the firm’s Canada Economics research effort. Daan and his team recently wrote a report titled “EV Sales Acceleration Poses Downside Risk to Global Oil Demand.” We were pleased to hear Daan’s perspective on the report, the acceleration in global EV adoption following the Iran/Hormuz supply disruption, the outlook for global oil demand and oil prices, and what investors should be watching across the broader energy landscape.
 
In our conversation, we explore the key findings from Goldman Sachs’ recent research on EV adoption, including how higher fuel prices and concerns around energy security may have accelerated EV sales across several major global markets following the Iran/Hormuz supply disruption. We discuss the significant differences in EV penetration rates around the world, the growing influence of Chinese manufacturers, the importance of charging and power infrastructure, and the role government policy continues to play in shaping adoption trends. We examine the outlook for global oil demand, including Goldman’s view that oil demand continues to grow through 2040 despite rising EV adoption, supported by growing energy consumption and the limited availability of substitutes for petrochemical feedstocks and jet fuel.
 
We discuss the recovery of Middle East oil production and exports following the conflict, OPEC supply dynamics, strategic petroleum reserves and stockpiling activity, and why oil prices did not rise as much as many expected during the Iran war disruption. We touch on investor sentiment toward energy markets, China’s role as both a major EV market and a stabilizing force in global oil demand through stockpiling behavior, and tightening power markets driven by rising electricity demand from AI and data centers. We also discuss the interplay between future oil prices, power prices, and EV adoption. Finally, we cover advancements in battery technology, the long-term implications for both the energy transition and global commodity markets, and more. We greatly appreciate Daan for sharing his time and perspectives.
 
To start the show, Mike Bradley noted that market volatility is becoming more prevalent across asset classes. From a fixed income perspective, the 10-year Treasury yield is holding steady at approximately 4.5%, with traders closely focused on this week’s PCE Index as a key inflation indicator, particularly in light of the Federal Reserve’s more hawkish tone following last week’s FOMC meeting. In equities, he emphasized the increasing volatility observed in recent trading sessions, especially within Big Tech and the Nasdaq, with semiconductor and chip stocks coming under notable pressure and with several declining by more than 10%. He suggested that market leadership may be shifting, as the Nasdaq lags while the Dow Jones Industrial Average demonstrates relative resilience. Turning to commodities, WTI crude has fallen to around $73/bbl, marking its lowest level since the first week of the Iran conflict. WTI has broken below its 200-day moving average, indicating that oil appears “broken” from a technical trading perspective. He also highlighted a rapid shift in market sentiment, moving from concerns about tightening global inventories to fears that OPEC supply could increase sooner and more significantly than expected. In energy equities, he observed that the sector has declined modestly over recent trading days, with Oil Services bearing the brunt of the losses. Electric utilities have outperformed, serving as a temporary safe haven for investors. He ended by pointing out two notable headlines: first, a partnership between Chevron and Microsoft to develop a co-located power facility in West Texas that will supply electricity to a Microsoft-operated data center under a 20-year PPA; and second, the Department of Energy’s announcement of $17.5 billion in financing to help incentivize/jump start utilities to order equipment for large-scale nuclear reactors. Ellen Wilkirson made her COBT debut and added her questions and perspective to the discussion as well.