In this week’s market analysis sponsored by interactive investor, we look at whether high oil prices will benefit EV battery stocks and ETFs as the Iran-US war enters a new phase.
Will high oil prices benefit EVs as the Iran-US war enters a new phase?
The drumbeat of war is escalating day by day.
Troops, war machines and tactics are being assembled into formations. Boots on the ground is fast becoming a reality. One of the potential US military targets is the Kharg Island off Iran’s coast.
Hopes of a short military campaign are being dashed. Whenever troops engage in enemy territory, a new front opens up. War, then, takes on its own logic. When will the Iranian conflict wrap up has become an open-ended question.
Back to the markets, the most important price to watch remains the crude oil.
Brent Crude (spot) remains above $110 per barrel this week as investors ponder the impact of US troops going into Iran.
Oil prices remain extremely volatile due to the nature of the business. One tweet from President Trump and crude prices may come tumbling down. So traders are extremely cautious these days; I suspect positions here are run with low-size exposure.
When circumstances are this fluid, Brent’s recent peak at $120 may be taken out on a bad day.
The bottom line is: the Strait of Hormuz remains closed.
According to maritime monitor (marinevesseltraffic.com/HORMUZ-STRAIT), most of the ships are seen stuck on either side of the Strait (see below).
In the past 24 hours, only 5 ships managed to pass through this narrow corridor, around 2.2% of the normal traffic.
Captains who attempt to brave through this dangerous Strait may see the ship damaged by Iranian drones and missiles. In that event, insurers may not pay out. Therefore, vessel companies are playing it safe for now.
Source: marinevesseltraffic.com
But the situation cannot last.
Many Asian countries are already issuing rationing orders, and the market is watching intensely for any further dislocation in the global economy.
Pakistan, for example, relies heavily on the Strait for its energy supply. If its oil supply dries up, it will cause riots in the streets, and this will have an economic knock-on effect on the region.
In the latest update on Investments for 2026, I highlighted some investments in this new phase of high oil prices. (See analysis here) The first category is energy stocks, such as oil majors. The other sector is fertiliser. Remember that not only crude oil passes through the Strait, but other commodities like urea also make their way out of the Gulf. This region produces 30% of the world’s fertiliser ingredients. Without fertilisers, the outlook for crops is becoming dire. Already, UK food growers are warning that food prices are set to surge.
Source: realeconomy.rsmus.com/market-minute-asian-economies-at-risk-as-oil-rationing-begins/
Will high oil prices benefit EV?
Once oil prices skyrocket and stay there, will this new economic paradigm benefit EVs?
The logic is straightforward. As oil supply dwindles, human ingenuity takes charge. Switching to other forms of energy becomes critical.
Perusing through EV stock charts, however, the market seems to disagree.
Tesla (TSLA), for example, slumped to a six-month low as investor sentiment deteriorated. Similarly, BYD (HK:1211), one of the world’s largest pure EV manufacturers, saw only a muted reaction in its share price this month.
But the market is casting a more favourable eye on batteries.
Look at the $1.7 billion Global X Lithium and Battery ETF (ticker: LIT) below. The fund has clearly outperformed the general market. If you flick through charts of its holdings, many of them are trading near their long-term highs – unlike those flaccid software stocks like Microsoft (MSFT), which is languishing near its 52-week lows.
Albemarle Corporation (ALB), the second largest holding in LIT, rose 14% last week to resuscitate the medium-term uptrend. Ganfeng Lithium (China:002460) high 3-year high on Monday (30 March).
Another stock that appears bullish is the Japanese Panasonic (ticker: 6752). The company, through its Panasonic Energy subsidiary, manufactures batteries and provides energy solutions to AI data centres. Revenue growth this year is predicted to be strong.
More importantly, the market is still bidding for its shares, as prices rose to new long-term highs last week (see below). The stock has been racking up new long-term highs this month during the Iran conflict.
Stocks that exhibit strong relative strength amidst a falling market are true defensive instruments.
Jackson is a core part of the editorial team at GoodMoneyGuide.com.
With over 15 years of industry experience as a financial analyst, he brings a wealth of knowledge and expertise to our content and readers.
Previously, Jackson was the director of Stockcube Research as Head of Investors Intelligence. This pivotal role involved providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Jackson brings a huge amount of expertise in areas as diverse as global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University and has authored over 200 guides for GoodMoneyGuide.com.
