The International Energy Agency (IEA) has warned that the ongoing Middle East conflict and the effective closure of the Strait of Hormuz are reshaping global energy investment strategies, prompting governments and companies to place greater emphasis on energy security, supply diversification and domestic energy production.
According to the IEA’s World Energy Investment 2026 report, the current disruption represents the second major global energy crisis in five years, following the energy shock triggered by Russia’s invasion of Ukraine in 2022. IEA Executive Director Fatih Birol described the situation as the most significant energy security crisis in decades, stating that it could influence global energy policies in a manner comparable to the oil shocks of the 1970s.
Global energy investment to reach $3.4 trillion
The report forecasts total global energy investment of $3.4 trillion in 2026. The IEA expects investment decisions to increasingly prioritize resilience, energy independence and diversification of supply chains.
Renewable energy continues to attract the largest share of power-sector investment. The report projects $665 billion in renewable energy investment, $365 billion allocated to solar power projects and more than 70 percent of global power-generation investment directed toward low-emission technologies The agency noted that countries are accelerating renewable deployment not only for climate reasons but also to reduce exposure to geopolitical risks and fuel supply disruptions.
Nuclear and energy storage gain momentum
Investment in nuclear power is expected to exceed $80 billion annually, supported by growing interest in energy security and stable baseload generation. Nearly 80 GW of new nuclear capacity is currently under construction across 15 countries.
Battery energy storage is also becoming a major investment category, with spending forecast to exceed $100 billion in 2026. Meanwhile, power-grid investment is expected to approach $550 billion, reflecting the growing need to integrate renewable energy and support electrification.
LNG investment rises while oil spending declines
Despite elevated oil prices, the IEA expects oil-sector investment to decline for a third consecutive year, falling below $500 billion. The agency cited uncertainty regarding future oil demand, long project development cycles, supply chain constraints, and tighter offshore drilling markets.
In contrast, natural gas investment is projected to reach $330 billion, the highest level in a decade. Major LNG export projects in the United States and Qatar are expected to drive much of this growth.
Coal investment rebounds amid security concerns
One of the report’s most notable findings is the resurgence of coal investment. Global coal-related investment is expected to reach $180 billion in 2026, the highest level since 2012. China is forecast to account for nearly 70 percent of global coal supply investment. The IEA noted that some Asian economies affected by supply disruptions may extend the operating lives of coal-fired power plants to strengthen energy security and reduce dependence on vulnerable import routes.
Data centers and artificial intelligence boost electricity demand
The report highlights artificial intelligence and data center expansion as increasingly important drivers of energy demand. In the United States, orders for new gas-fired power generation reached a 25-year high during 2025, partly due to rising electricity requirements from AI-related infrastructure. Strong demand from both the US and Middle East is also tightening global turbine supply chains, creating equipment shortages that could delay projects in other regions.
Financing challenges increase for future projects
While investment levels remain robust, the IEA cautioned that geopolitical instability is increasing financing risks across the energy sector. Rising market volatility is delaying investment decisions, increasing project financing costs, creating uncertainty for capital-intensive projects, and disproportionately affecting emerging economies. The agency warned that higher borrowing costs could slow deployment of both conventional and low-carbon energy projects, particularly in developing markets where financing conditions are already challenging.