The ongoing crisis in the Middle East has exposed major vulnerabilities in global supply chains for hydrogen-based products, disrupting industries ranging from agriculture to chemicals and fuel production, according to the latest report from the International Energy Agency (IEA).
The IEA’s Global Hydrogen Review highlights how the conflict has interrupted the production, trade, and transportation of key hydrogen-derived commodities, including ammonia, urea, methanol, and refined petroleum products. The disruption has underscored the world’s heavy reliance on the Middle East, which accounts for roughly one-sixth of global hydrogen production.
While the crisis has renewed interest in low-emissions hydrogen as a long-term solution for improving energy security, the report notes that production levels remain too low to provide an immediate alternative. Global hydrogen demand exceeded 100 million tonnes in 2025, while low-emissions hydrogen output increased by 20% to nearly 1 million tonnes.
Despite this growth, the sector continues to face significant challenges, including high production costs, uncertain market demand, regulatory complexity, and inadequate infrastructure. These obstacles are increasingly threatening government targets for hydrogen deployment by 2030.
IEA Executive Director Fatih Birol said the conflict has demonstrated how dependent global economies are on hydrogen-based products used in fertilizers, fuels, and industrial manufacturing. He stressed that low-emissions hydrogen could play a key role in creating more resilient and diversified energy systems, but only with stronger policy backing and faster project development.
Fertilizer markets have been among the hardest hit. Supply disruptions, rising natural gas prices, and export restrictions pushed global urea prices to double between January and May 2026, increasing costs for farmers and raising concerns about food security, particularly in countries that rely heavily on imported fertilizers.
The report projects that low-emissions hydrogen production will reach a new milestone in 2026, surpassing 1% of total global hydrogen output for the first time. However, investment activity weakened throughout 2025, with numerous projects delayed or canceled.
The pipeline of announced low-emissions hydrogen projects expected by 2030 has shrunk by nearly 25% over the past year, falling to 27 million tonnes. Projects considered likely to become operational by the end of the decade have declined from 10 million tonnes to just over 6 million tonnes.
A lack of reliable demand remains one of the industry’s biggest challenges. New offtake agreements for low-emissions hydrogen showed little growth in 2025, and only about one-fifth of newly contracted volumes were supported by firm purchase commitments, limiting investor confidence.
China continues to dominate electrolyser deployment, accounting for approximately 75% of new installations in 2025 as global capacity doubled to 4 gigawatts. However, the report detected signs of slowing momentum, with investment decisions for new electrolysis-based hydrogen projects declining for the first time. Policymakers in Beijing introduced additional support measures late in 2025 to stimulate future growth.
Europe is making progress through government incentives and regulatory mandates, particularly in the refining sector, although delays in implementing key regulations continue to slow investment. North America, India, and Japan are also advancing hydrogen initiatives, but uncertainty surrounding incentives, regulations, and future demand remains a concern.
The report also points to Africa’s significant long-term potential. With abundant renewable energy resources, the continent could become a major producer of low-emissions hydrogen. Yet development remains in its early stages, with current production estimated at only 6,000 tonnes annually. None of the 34 hydrogen projects announced across Africa for operation by 2030 have yet secured a final investment decision.
According to the IEA, hydrogen could help drive industrial growth, strengthen food security through local fertilizer production, and support value-added industries such as steel manufacturing across Africa. Achieving these goals, however, will require lower financing costs and closer integration of hydrogen strategies with broader economic development plans.
