IEA Projects USD 3.4 Trillion Energy Investment in 2026 Amid Middle East Crisis

The ongoing conflict in the Middle East is prompting governments and businesses worldwide to reassess their energy investment strategies, with concerns over energy security and global supply chain reliability driving a shift toward diversified energy sources, according to the International Energy Agency’s (IEA) latest World Energy Investment 2026 report.

The report projects global energy investment to reach USD 3.4 trillion in 2026, marking a modest increase from the previous year. Of this, around USD 2.2 trillion is expected to be directed toward electricity grids, energy storage, low-emissions fuels, nuclear power, renewable energy, energy efficiency and electrification initiatives. Investments in oil, natural gas and coal are projected at approximately USD 1.2 trillion.

According to the IEA, disruptions to shipping routes through the Strait of Hormuz and growing geopolitical uncertainty have intensified concerns over energy security, particularly across Asia and the Middle East. The agency noted that the current crisis, following the energy shock caused by Russia’s invasion of Ukraine in 2022, is likely to have a lasting impact on future investment decisions.

Despite elevated crude oil prices, global oil investment is expected to decline for the third consecutive year in 2026. The report attributes this trend to uncertainty surrounding the duration of the current price surge, lengthy project development timelines, supply chain bottlenecks and tighter offshore rig availability. In contrast, investment in natural gas is forecast to reach its highest level in a decade, supported by major liquefied natural gas (LNG) export projects in the United States and Qatar.

Renewable energy continues to attract significant capital, with investment in renewable power projects expected to reach around USD 665 billion in 2026. Solar energy alone is projected to account for approximately USD 365 billion of that total. Although annual growth in renewable investment has moderated compared with previous years, low-emissions technologies still represent more than 70 percent of total global power generation investment.

Nuclear power investment is also gaining momentum, exceeding USD 80 billion annually. Nearly 80 GW of new nuclear generation capacity is currently under construction across 15 countries, reflecting renewed interest in reliable, low-carbon electricity generation.

Meanwhile, coal investment is projected to rise to USD 180 billion in 2026, the highest level since 2012. China is expected to account for nearly 70 percent of global coal supply investment. The IEA noted that some Asian nations affected by the current energy disruptions may extend the operational life of existing coal-fired power plants to strengthen energy security.

The report highlighted that financing conditions for future energy projects have become more challenging due to heightened financial market volatility linked to the Middle East conflict. Rising financing costs and delayed investment decisions could particularly affect capital-intensive technologies.

Electricity-related spending remains the dominant trend in global energy investment. Investment in electricity supply and infrastructure is expected to approach USD 1.6 trillion in 2026 and rise to nearly USD 2 trillion when end-use electrification is included. Spending on electricity grids is projected to reach almost USD 550 billion, up nearly 20 percent year-on-year, while investment in battery storage is expected to surpass USD 100 billion.

The IEA also noted that the rapid expansion of data centres and artificial intelligence applications is becoming a major driver of energy investment, especially in the United States. Orders for new gas-fired power plants reached a 25-year high in 2025, with growing power demand from data centres playing a significant role in the increase.