Middle East war: Beijing’s shift to renewable energy and electric vehicles has reduced its oil consumption by at least 10%. The ongoing Middle East conflict may further benefit China’s EV industry, as higher oil prices drive global expansion, particularly in Asia. File image of a A BYD ATTO 3 electric vehicle (REUTERS) Middle East war: Ever since the US and Israel launched a war against Iran in late February, many analysts have suggested how the conflict could benefit Russia. With the Strait of Hormuz shut and global energy markets in disarray, countries may increasingly rely on Russia to meet their energy needs, importing its crude oil to bypass the sanctions imposed on it. Now, another country appears to be benefiting from the war as well.
According to a CNN report, the worst oil crisis in history could benefit Beijing’s electric vehicle (EV) makers. The three-week-long war has disrupted the fossil fuel supplies from the Middle East, prompting crude oil prices to jump higher to $119 a barrel last week.
The report suggests that the crisis couldn’t have come at a better time for Beijing’s EV industry. While the country exports and manufactures more electric cars than any other country, the EV carmakers have faced fiercer price competition and slowing growth back home. The Chinese EV brands are under immense pressure to find other markets.
Cheaper EVs and higher gasoline prices are helping the Chinese industry As electric vehicles are now getting cheaper and gasoline prices are higher than pre-war levels, the combination is likely to boost the EV industry’s global expansion, especially in Asian countries bearing the brunt of fuel shortages, CNN reported, citing analysts.
Tu Le, managing director at Sino Auto Insights, a car-focused consultancy, told CNN, “There’s potential for Chinese brands to make a ton of inroads into Asia on the backs of higher petrol costs,” adding that he would like to see those brands take full advantage of the situation.
In a recent report, energy think tank Ember described EVs as “the largest lever to cut import bills,” estimating that their use last year reduced global crude consumption by 1.7 million barrels per day, roughly 70% of Iran’s exports in 2025.
Asia is heavily dependent on oil imports Despite rising investment in renewable energy across Asia, the three-week-long conflict in the Middle East has underscored the region’s continued dependence on oil imports. Roughly 60% of Asia’s crude supply comes from the Middle East via the Strait of Hormuz, where Iran has significantly restricted cargo flows.
Oil crisis to serve as a turning point for Asia? Analysts suggest that the ongoing oil crisis could serve as a turning point for Asia’s clean energy industry, similar to Russia’s invasion of Ukraine in February 2022, which drove renewable energy investments in Europe.
When fuel prices rise once in a low-inflation setting, consumers may dismiss it, said Lauri Myllyvirta, lead analyst and co-founder of the Centre for Research on Energy and Clean Air. But a second spike can serve as a wake-up call, reinforcing how volatile prices are and how relying on petrol vehicles leaves people vulnerable to these fluctuations.
China’s move towards renewable energy has paid off For Beijing, which gets over 40% of its oil from the Middle East region, a move towards renewable energy has clearly paid off. With the world’s largest oil reserves and its leading position in wind and solar power generation, China is more shielded from the energy crisis than other Asian countries.
Analysts estimate that ever since EVs have spread in Beijing, accounting for over 50% of its new car sales and roughly 12% of all registered vehicles, the move has reduced its oil consumption by at least 10% last year.
“From China’s perspective, this scenario is exactly what has been at the back of their minds when they have been pursuing their energy security strategy,” the analyst said.
What remains to be seen is whether the Chinese EV industry takes advantage to prompt a clear energy shift in Asia, or whether its ambition will remain unfulfilled.
Get Latest real-time updates
Stay updated with the latest Trending, India , World and US news.
Home News WorldMiddle East war: Oil crisis from US-Iran war could boost China’s EV makers as fuel prices surge, says report
More
https://www.livemint.com/news/world/middle-east-war-oil-crisis-from-us-iran-war-could-boost-china-s-ev-makers-as-fuel-prices-surge-report-11774441838535.html
