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Traditional oil companies diversify their business models in view of the energy transition and geopolitical uncertainties. Chevron, Exxonmobil and Occidental Petroleum invest massively in lithium funding in order to benefit from the growing battery demand. Chevron has acquired over 50,000 hectares for lithium reduction and relies on modern DLE technology. At the same time, geopolitical tensions in the Middle East remain a central factor for the oil market. The street of Hormus, through which 22.8 million barrels of oil are transported every day, is the focus because of the Iran Israel tension. A possible blockade could lead to a shortage of offer and favor American oil producers.
Possible closure of the Hormus street as part of the Iran-Israel conflict
With regard to global trading with oil, oil companies continue to see the ongoing tensions between Iran and Israel. Particular attention is paid to the street of Hormus, one of the most important shipping roads for oil and gas trading, which connects Iran and Oman. A possible blockade could have a possible closure to a significant shortage of the global offer. According to data from the Energy Information Administration, 22.8 million barrel oil currently passes the ship’s passage every day.
At the same time, the announcement by US President Trump is “Drill Baby Drill” with regard to oil production. If there is actually a shortage of the offer due to the closure of the street, oil drilling could become a lucrative business model again. Even if he cannot adhere to his promise of increased funding quantities, the increased prices could have a positive effect on American oil companies.
This constellation creates paradoxical market conditions: While geopolitical risks traditionally lead to price volatility, domestic producers benefit from higher world market prices. Analysts already observe increased investments in slate oil production because companies want to expand their capacities for potential delivery bottlenecks.
Chevron, Exxonmobil and Occidental Petroleum rely on lithium
In order to achieve a certain independence from the classic oil business, Chevron is now starting to promote lithium. In order to benefit from the current development in battery technology, the group recently acquired two over 50,000 hectares of space for the potential degradation of the raw material. This diversification strategy is intended to open up new sources of income for the company. Chevron wants to rely on the advanced direct lithium extraction (DLE) technology, which is significantly more environmentally friendly and faster at the same time. According to a message from Chevron, this technique enables the water to be returned to the ground after breakdown.
Exxonmobil and Occidental Petroleum have already positioned themselves in the market and have made large investments in order to benefit from the increasing demand for lithium for modern batteries. A study by McKinsey (Battery 2030: Resilient, Sustainable, and Circular, 2023) predicts that the value of the entire value chain from breakdown to recycling could grow to over $ 400 billion by 2030. Based on 2022, this corresponds to an annual growth of 30 percent by 2030.
The strategy shows how traditional energy companies can adapt their business models in order to benefit from both fossil fuels and electrification equally. DLE technology in particular could create a competitive advantage because it promises faster mining cycles and lower environmental impacts.
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Imprint:
Bank Vontobel Europe AG
De-Bockenheimer Landstrasse 24
60323 Frankfurt am Main
Telephone: 00 800 93 00 93 00
Fax: +49 (0) 69 69 59 96-3202
Email: [email protected]
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Bank Vontobel Europe AG
Old farm 5
DE-80331 Munich
Supervisory Board: Brian Fischer (Chair)
Board: Thomas Fischer, Anton Hötzl, René Weinhold
Entered in the commercial register at the Munich District Court under HRB 133419
VAT-IDNr. DE 264 319 108
Responsible supervisory authority:
Federal Financial Service Supervisory Authority (BaFin)
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DE-53117 Bonn
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