The ongoing conflict in the Middle East is forcing governments and energy companies to rethink long-term investment strategies as disruptions to global trade routes intensify concerns over energy security, according to the latest report from the International Energy Agency (IEA).
In its 2026 World Energy Investment report, the IEA said the current crisis — driven largely by the effective closure of the Strait of Hormuz — is transforming global risk perceptions and accelerating efforts to diversify energy supplies and transportation routes.
The report comes only a few years after the 2022 energy crisis linked to the war in Ukraine, with analysts warning that the latest disruptions could leave a lasting impact on energy investment priorities, especially across Asia and the Middle East, where shipping interruptions through the Strait of Hormuz have hit hardest.
“We are in the midst of the largest energy security crisis the world has ever faced,” said IEA Executive Director Fatih Birol. “This is likely to reshape investment strategies globally, much like the oil shocks of the 1970s transformed the energy sector.”
Birol said producer and consumer nations are already accelerating efforts to secure alternative energy supplies through new pipelines, expanded infrastructure and greater reliance on domestic resources. These include renewable energy, nuclear power, oil, gas and even coal in some markets, alongside broader investments in electricity systems, electrification and energy efficiency.
Despite mounting geopolitical uncertainty, the IEA projects global energy investment will rise slightly to $3.4 trillion in 2026.
Around $2.2 trillion is expected to be directed toward grids, storage, low-emissions fuels, renewables, nuclear energy, efficiency and electrification projects, while approximately $1.2 trillion will go toward oil, natural gas and coal investments.
Oil investment, however, is forecast to decline for a third consecutive year, dropping below $500 billion despite elevated crude prices. The IEA attributed the slowdown to uncertainty over the duration of the price spike, supply chain constraints, long project development timelines and tighter offshore rig markets outside the Middle East.
Natural gas investment is expected to climb to $330 billion — its highest level in a decade — driven by a wave of new LNG export projects, particularly in the United States and Qatar.
Renewable energy continues to dominate global power sector spending, with investment in renewable projects projected to reach around $665 billion in 2026, including $365 billion dedicated to solar power alone. Although growth in renewable investment has slowed after years of rapid expansion, low-emissions technologies still account for more than 70% of global power generation spending.
The report also highlighted a resurgence in nuclear energy investment, which now exceeds $80 billion annually. Nearly 80 gigawatts of new nuclear capacity are currently under construction across 15 countries.
At the same time, coal investment is expected to rise to $180 billion in 2026 — the highest level since 2012 — with China responsible for nearly 70% of global coal supply spending. The IEA noted that several Asian economies affected by the crisis may keep coal-fired power plants operating longer to strengthen energy security.
Energy efficiency remains another growing area of focus. The report estimates that around $350 billion is invested globally in efficiency improvements each year, with at least 20 countries already introducing new efficiency-related policies in response to the crisis.
However, the Middle East conflict is also creating challenges for future project financing. Increased market volatility is slowing short-term investment decisions and driving up long-term financing costs for major energy developments.
Electricity infrastructure remains the largest segment of global energy spending. Investment in electricity supply and infrastructure is projected to reach nearly $1.6 trillion in 2026, rising to almost $2 trillion when end-use electrification is included.
Spending on electricity grids is expected to approach $550 billion, marking a nearly 20% annual increase, while battery storage investment is forecast to exceed $100 billion.
The rapid expansion of artificial intelligence and data centres is also emerging as a major driver of energy investment, particularly in the United States. According to the IEA, orders for new gas-fired power plants reached a 25-year high in 2025, with rising electricity demand from data centres playing a significant role.
