The conflict in the Middle East is prompting governments and companies to rethink energy investment strategies, according to the IEA's 2026 World Energy Investment report. The effective closure of the Strait of Hormuz has shifted risk perceptions and reinforced moves towards diversification, particularly in Asia and the Middle East. "We are in the midst of the largest energy security crisis the world has ever faced," said IEA Executive Director Fatih Birol, drawing parallels with the oil shocks of the 1970s. Producer and consumer countries are advancing new pipelines and supply infrastructure while turning to domestically available resources, from renewables and nuclear to coal, oil and gas.
IRENA charts electrified path as fossils head below 20%
Global energy investment is projected to reach $3.4 trillion in 2026. Around $2.2 trillion will flow to grids, storage, low-emissions fuels, nuclear, renewables, efficiency and electrification, with $1.2 trillion going to oil, gas and coal. Oil investment is set to fall below $500 billion for a third consecutive year, constrained by price uncertainty, long lead times and supply chain pressures. Gas investment will climb to $330 billion, its highest in a decade, supported by new LNG projects in the United States and Qatar. Coal spending is expected to rise to $180 billion, the highest since 2012, with China accounting for nearly 70 percent.
Solar draws $365 billion of global investment
Renewables investment will total around $665 billion, with $365 billion for solar alone. Low-emissions sources still represent more than 70 percent of global power generation investment. Nuclear spending continues its resurgence above $80 billion annually, with close to 80 GW under construction across 15 countries. Electricity remains the dominant theme. Investment in electricity supply and infrastructure is expected to reach nearly $1.6 trillion, rising to $2 trillion including end-use electrification. Grid spending will approach $550 billion, up nearly 20 percent year-on-year, while battery storage investment will exceed $100 billion.
Report: solar saves EU €10 billion on gas since Iran war
Data centres and AI are also reshaping investment patterns, particularly in the United States, where orders for new gas-fired power plants hit a 25-year high in 2025. Strong demand in the United States and the Middle East is tightening turbine availability elsewhere. The IEA cautions that financial market volatility triggered by the conflict is slowing investment decisions and raising long-term financing costs, with disproportionate effects expected in emerging and developing economies. (hcn)
