The global race to secure critical minerals has taken an unexpected turn, as the energy industry's embrace of artificial intelligence (AI) is both boosting and hindering the transition to a low-carbon future.
According to a recent report from energy research firm Wood Mackenzie, AI could help the industry tap an additional one trillion barrels of oil by making more of these barrels economical to extract. "AI becomes a boost for global oil demand, not a bridge to net zero," the analysts concluded. This prediction has added fuel to an already heated debate: will AI accelerate the transition or, as Wood Mac suggests, hinder it by extending the world's reliance on fossil fuels?
AI Unlocks New Oil and Gas Reserves
For the energy industry, the question is rather irrelevant. As CNBC reported, companies are racing to deploy AI across their operations, from upstream exploration to downstream refining. Oracle, for example, recently beat earnings estimates and increased its AI deal pipeline, though concerns over its financing strategy remain.
Meanwhile, Cisco's stock hit a record high not seen since the dot-com boom, as the networking giant positions itself at the center of the AI craze. "Cisco was at the center of the internet boom, and has a much different role in today's artificial intelligence craze," CNBC noted.
The potential upsides are clear. Reuters reported that BP, Woodside, and Chevron were among the big winners at the latest Gulf of Mexico oil and gas auction, as they seek to leverage AI to unlock new reserves. And in the natural gas sector, CenterPoint Energy has partnered with Palantir and Nvidia to "remove constraints in the nation's grid and advance U.S. artificial intelligence (AI) infrastructure," according to Natural Gas Intel.
The Critical Minerals Crunch
But the energy industry's AI-fueled ambitions are colliding with a looming supply crunch for the critical minerals needed to power the green transition. As Reuters reported, Senegal plans to nationalize the Kosmos-run Yakaar-Teranga gas project, underscoring the geopolitical tensions over resource control.
Elsewhere, the EU has approved a phase-out of Russian gas imports, a move that will require massive investments in new infrastructure and supply chains. "Data-centre electricity demand will jump more than fivefold by 2030, swallowing nearly nine per cent of the UK's power," OilPrice.com warned, raising questions about whether small nuclear reactors can solve Britain's "AI energy crunch."
The Race to Secure Critical Minerals
Against this backdrop, the race is on to secure supplies of lithium, cobalt, rare earths, and other critical minerals essential for electric vehicles, renewable energy, and digital technologies. As the U.S. seizes an oil tanker off the coast of Venezuela, OilPrice.com noted that "the operation marks a major escalation in tensions between Washington and Caracas."
The stakes couldn't be higher. As the American Federation of Teachers warned, the crypto market structure bill currently under consideration in the Senate could put Americans' retirement plans at "profound risk" by exposing them to the volatility of the critical minerals market.
The Path Forward
Ultimately, the energy industry's embrace of AI is a double-edged sword. While it may unlock new reserves of oil and gas, it also risks exacerbating the critical minerals crunch that threatens to undermine the green transition.
Moving forward, policymakers and industry leaders will need to strike a delicate balance, leveraging AI to optimize mining and processing operations while also investing in diversified, resilient supply chains for the materials that will power the low-carbon economy. It's a complex challenge, but one that will shape the future of the global energy landscape.
Reporting based on coverage from Reuters, CNBC, OilPrice.com, and Natural Gas Intel, December 10-11, 2025.