The coming electric disruption and its ripple effects on the region

China’s electric surge is quietly rewriting the global oil story. As electric cars, buses, and trains race across Chinese cities, they are not just cleaning the air; they are chipping away at the demand that underpins South Asian remittance lifelines. China, the world’s largest oil importer, accounting for roughly 15-20% of global consumption, is aggressively pivoting toward electrification, backed by massive investments in solar, wind, hydro, nuclear, and advanced battery technologies.

Recent data underscore this shift. In 2025, new energy vehicles (NEVs) will surpass 50% of new car sales in China for the first time, with electric models displacing over 1 million barrels per day of oil demand already. Forecasts suggest this could rise significantly, contributing to a plateau in China’s oil consumption as early as the late 2020s.

Globally, electric vehicles are poised to displace 5 million barrels per day by 2030, with China leading the charge. This structural change, combined with slowing economic growth and efficiency gains elsewhere, is capping oil demand growth at historically low levels, around 830,000 barrels per day in 2025, per the International Energy Agency.

The consequences for oil markets are stark. Brent crude has languished near $60 per barrel in recent weeks, down from higher levels earlier in the decade. Investment banks and analysts, including Goldman Sachs, JPMorgan, and the US Energy Information Administration, project further declines, with averages potentially dipping below $60 in 2026 and into the $50s amid a persistent supply glut. Some scenarios even envision prices approaching the low $40s if demand weakens further. This is not merely cyclical; it reflects a secular shift toward electrification that could accelerate if other emerging markets, including India, Southeast Asia, and even parts of Africa, follow China’s lead, albeit more gradually.

For oil exporters like Saudi Arabia, this poses fiscal challenges and low oil revenues could slow Vision 2030’s ambitious diversification into tourism, entertainment and non-oil industries efforts.

Opportunities however, exist amid the disruption. Lower oil prices could accelerate Saudi investments in renewables.

The Kingdom already boasts massive solar potential and positions itself as a green hydrogen exporter. Vision 2030’s focus on technology and manufacturing could attract foreign capital seeking alternatives to volatile hydrocarbons. If Riyadh pivots decisively, leveraging its Public Investment Fund toward battery supply chains or EV components, it will emerge stronger in a post-oil world.

Saudi Arabia and Pakistan face asymmetric shocks: the former must diversify, the latter stabilize. 

-Javed Hassan

The ripples extend to remittance-dependent economies like Pakistan, where Gulf workers form a critical lifeline.

Overseas Pakistanis sent record inflows exceeding $3 billion monthly in late 2025, with Saudi Arabia and the UAE accounting for about 45% of totals. These remittances, often 8-10% of GDP, buffer Pakistan’s chronic balance-of-payments woes and support consumption amid a bulging youth population entering the labor market.

Lower oil prices offer a mixed blessing. Cheaper imports since Pakistan spends heavily on energy could ease the current account deficit and inflation pressures. Yet, the offset from reduced remittances may prove insufficient. 

Threats to Pakistan are acute: falling remittances could exacerbate unemployment among its youth bulge, fueling social unrest or migration pressures. Combined with high external debt and IMF program conditionality, these risks renewed balance-of-payments crises, reminiscent of past episodes that triggered sharp depreciations and austerity.

Still, opportunities glimmer. Lower energy costs provide breathing room to invest in domestic renewables and electrification, reducing long-term import dependence. The electric revolution heralds a lower-for-longer oil price era, echoing the debt-fueled booms and busts chronicled in economic history. Saudi Arabia and Pakistan face asymmetric shocks: the former must diversify, the latter stabilize. Prudent reforms: fiscal buffers, skill upgrades, and green transitions offer pathways forward. But delay risks amplifying vulnerabilities in an unforgiving global economy. 

– Javed Hassan has worked in senior executive positions both in the profit and non-profit sector in Pakistan and internationally. He’s an investment banker by training. X: @javedhassan