Oil consumption could take a major hit in the coming years as a growing number of countries take steps to yank the internal combustion engine from their streets, Barclays analysts forecast.
Adoption of electric vehicles and improved fuel efficiency could wipe out 3.5 million barrels a day of demand from cars by 2025, Barclays commodities analysts projected in a research note on Wednesday. That is roughly equivalent to the total production of OPEC's third-largest producer, Iran, which pumps about 3.8 million barrels a day, Reuters first noted.
If electric vehicles make up one-third of the car market by 2040, it could knock out 9 million barrels a day of demand, or about 90 percent of Saudi Arabia's daily output. World oil demand will be 96.8 million barrels a day this year, OPEC forecasts.
Some of the world's top automotive markets have recently proposed banning or curbing the use of vehicles that burn fossil fuels, Barclays notes. They include developed European nations like France, Germany and the U.K., as well as top growth markets China and India. California is also considering a ban.
To be sure, Barclays says there are still multiple barriers to electric vehicle adoption. Consumers can be turned off by their price and battery life, and there are still questions hanging over the auto industry's ability to ramp up production.
The range of zero-emissions vehicles on offer will expand significantly in the coming years, but sales targets are still just a "drop in the bucket" of the total market, according to Barclays.
Global sales of electric vehicles rose by 40 percent last year, as manufacturers offered consumers more options and better performance, according to the International Energy Agency. However, the roughly 2 million electric vehicles on the road still account for less than 0.2 percent of the global fleet of light-duty vehicles, the IEA notes.
Persistently weak gasoline prices have also encouraged drivers to buy large passenger vehicles like SUVs, the agency adds.
On Thursday, the IEA reported that progress on energy efficiency policy last year was the weakest since 2009. The energy advisor chalked up the poor performance to the sluggish introduction of new efficiency policies.
In the automotive sector, light-duty vehicle sales "grew faster in markets with lower average vehicle efficiencies" between 2010 and 2015.
"Current LDV fuel economy standards are improving efficiencies of new sales, but not fast enough to stay on track to meet long-term LDV efficiency targets," the IEA warned.
On the other side of the plug, Barclays says Europe's demand for natural gas-fired power does not seem likely to increase much as more electric vehicles hit the road. Natural gas demand on the Continent peaked in 2010, declined from there and has only just begun to pick up as gas becomes more competitive with coal.
Electric vehicles accounted for about 1.5 percent of all new car registrations in Europe last year, according to OPEC.