The oil shock that boosted crude prices to their highest level in years could soon be a distant memory.
Goldman Sachs says that as the Iran war seems to be winding down and oil shocks fade, the direction of crude between now and the end of 2027 will be lower, spurred by a big consumer shift.
Daan Struyven, co-head of global commodities research at Goldman Sachs and a team of analysts, wrote that they see the war-driven oil shocks leading to a surge in demand for electric vehicles, ultimately putting downward pressure on oil prices.
"We estimate a potential hit to global oil demand in December 2027 of 0.13-0.32mb/d (or 0.1-0.3% of global demand), depending on the persistence of the realized EV car sales acceleration," Struyven wrote.
EV sales had declined significantly recently, sparking speculation that the elimination of federal tax incentives would continue to crush the market. But as Goldman highlighted in the note, EVs have come roaring back globally in response to the surge in gas prices caused by the Iran war.
The analysts broke down the math on EV sales growth, noting that since February, sales have jumped 3.4 percentage points. In May 2026, they accounted for more than 26% of all vehicle sales, an all time high with the exception of September 2025 when US buyers rushed to snap up electric cars before the federal tax credit was eliminated.
While assessing potential outcomes, Struyven's team applied a rule of thumb that assumed that for every one million drivers who made the switch to an EV in the US, daily oil demand would fall by roughly 30,000 barrels. Outside the US, it would be 20,000 barrels per day.
Struyven added that acclerating EV demand adoption supports their previous oil price call, made when President Trump announced a deal to reopen the Strait of Hormuz.
"In this downside scenario, global oil demand experiences a 1.5mb/d Hormuz-related persistent loss (vs 0.5mb/d in our base case), and Brent declines to the mid-$50s/bbl in late 2027 (with supply beats also weighing on prices)," he wrote.
The analysts also noted that the EV-driven hit to crude demand could be even worse than the current analysis suggests, as their forecast did not account for non-passenger EVs, which are gaining rapid popularity in major markets such as China and India.
"Higher global EV passenger car sales is just one channel via which the Hormuz shock may weigh on long-term oil demand, even if oil products prices moderate further," Struyven said.
