China’s relationship with oil is changing faster than many expected.
Oil consumption in China fell sharply in the second quarter of 2026, with oil use down 9% from a year earlier. Transport was one of the biggest drivers, as electric vehicles continued replacing petrol and diesel-powered travel.
The development is important beyond China. As the world’s largest oil importer, China’s changing appetite for crude can influence global oil prices, fuel markets and the countries that depend heavily on imported energy.
But there is another country worth watching here, India.
India is nowhere near China’s level of electrification yet. In fact, the International Energy Agency expects India to become the largest source of global oil-demand growth through 2030. But the latest vehicle sales numbers suggest that the Indian transport market is beginning to move in a different direction too.
Why China’s oil consumption is falling
The biggest change is happening on the roads.
China has built the world’s largest electric vehicle market, and electrification is no longer limited to private cars. Electric buses, trucks and other commercial vehicles are increasingly replacing vehicles that would otherwise consume diesel and petrol.
The IEA estimates that EVs displaced around 1 million barrels of oil per day in China in 2025. Globally, EVs displaced about 1.7 million barrels per day. By 2030, the amount of oil displaced by EVs worldwide could rise to around 5 million barrels per day under current policy settings.
China is also seeing rapid electrification of heavy-duty transport. Electric truck use rose sharply in 2026, adding another source of pressure on diesel demand.
This means the shift is no longer simply about consumers choosing an electric car over a petrol car. It is beginning to affect the wider structure of energy demand.
India is not China yet
India’s situation is very different.
The country is still urbanising, industrialising and adding millions of vehicles to its roads. More people are travelling, more goods are being transported and aviation is expanding. All of that requires energy.
The IEA expects India’s oil demand to increase by almost 1.2 million barrels per day between 2023 and 2030, reaching around 6.6 million barrels per day. Diesel is expected to account for almost half of India’s additional oil-product demand during this period.
So while China is beginning to reduce its dependence on oil, India is still adding to global demand. But that does not mean India’s transport sector is standing still.
India’s EV market is growing fast
India recorded its strongest EV retail sales yet in July, with 327,901 electric vehicles sold, up 66% year-on-year. EVs accounted for nearly 12% of overall vehicle retail sales that month.
August brought another sign of momentum. India’s EV sales increased 51% year-on-year, even though registrations fell from July because of festival-related holidays. Electric two-wheelers grew particularly strongly, while electric passenger-vehicle registrations were also substantially higher than a year earlier.
The more interesting development is not simply the growth in EVs.
In August, alternative-fuel vehicles, including CNG, hybrids and EVs, reportedly overtook petrol-powered cars in India’s passenger-vehicle sales mix for the first time.
That does not mean petrol is suddenly disappearing from Indian roads. It does mean buyers are increasingly willing to consider alternatives.
Why this matters for India’s oil bill
India imports most of the crude oil it consumes. That makes transport electrification more than a climate story.
Every kilometre travelled using electricity instead of petrol or diesel potentially reduces the amount of imported crude required to keep Indian vehicles moving.
The IEA estimates that new EVs and improvements in vehicle efficiency could avoid around 480,000 barrels per day of additional oil demand in India between 2023 and 2030. Without those savings, India’s oil-demand growth would be considerably higher.
This is where China’s experience becomes relevant.
China demonstrates that once electric vehicles reach sufficient scale, they can begin changing oil demand itself. India is still in the earlier phase, but its rapidly expanding electric two-wheeler, three-wheeler and passenger-vehicle markets could gradually produce a similar effect.
Bigger change may come from two-wheelers
India’s EV story cannot be judged only by electric cars.
Two-wheelers are crucial because they are far more common in India than cars and are an important part of everyday urban and semi-urban mobility.
In August, electric two-wheeler sales rose 69% year-on-year, according to industry data.
If electric scooters and motorcycles continue becoming cheaper and charging infrastructure expands, they could reduce petrol consumption across a much larger section of the population than electric cars alone.
That could eventually make India’s oil-demand growth look very different from today’s forecasts.
China may be showing India what comes next
China’s falling oil consumption does not mean the global oil age is ending overnight.
Oil is still essential for aviation, petrochemicals, shipping, heavy industry and several other sectors. The IEA also notes that China’s petrochemical feedstock demand continues to grow even as transport-related oil demand weakens.
But the direction of travel is becoming clearer.
For decades, economic growth almost automatically meant more fuel consumption. China is now demonstrating that this relationship can weaken when economies electrify their transport systems at scale.
India is still in a phase where economic growth is increasing energy demand. But its EV market is growing quickly enough that the question is no longer whether electrification will affect oil consumption.
The more important question is how soon it will begin to materially change India’s oil-demand trajectory.
And for a country that spends heavily on imported crude, that could eventually become as much an economic story as an environmental one.
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