IEA: Mideast war reshaping national energy strategies globally

The International Energy Agency (IEA) has stated that the ongoing war in the Middle East is triggering the largest energy security crisis the world has ever faced, and this is expected to reshape investment strategies globally, with parallels to the major changes witnessed after the oil shocks of the 1970s.

IEA Executive Director Fatih Birol made these remarks in the World Energy Investment report, as reported by AFP. He noted that both producer and consumer countries are intensifying efforts to diversify trade routes and energy sources. This includes advancing new pipelines and other supply infrastructure, as well as turning more to domestically available resources.

The IEA estimates that global energy investment will reach US$3.4 trillion in 2026, slightly higher than the previous year. Of this, around US$2.2 trillion is expected to be invested in power grids, storage, low-emission fuels, nuclear, renewables, energy efficiency, and electrification. Meanwhile, about US$1.2 trillion is projected for oil, natural gas, and coal.

Despite rising crude prices, the IEA expects oil investment to decline for the third consecutive year in 2026, falling below US$500 billion. This decline is attributed to uncertainty over how long higher prices will last, project lead times, supply constraints, and the tightening offshore rigs market, which are limiting short-term investment outside the Middle East.

According to the report by the IEA, an agency of the Organization for Economic Co-operation and Development (OECD), the current crisis is prompting a fundamental reassessment of energy security and investment priorities worldwide.