Dwight Links
The International Energy Agency says that the investment trends into new or existing energy infrastructure and projects will continue in 2026, even during conflict periods, and is expected to be more than the level of 2025.
“Despite the destabilising effect of the Middle East conflict, capital flows to the energy sector are expected to grow to USD 3.4 trillion in 2026, a 5% rise from 2025,” the agency says in their latest Global Energy Investment report for this year.
Noting the categories that will receive this investment attention will be in renewables, nuclear and related infrastructure. Oil, gas and coal will still receive their share of investment in the same period.
“Around USD 2.2 trillion is expected to go collectively to renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification, and some USD 1.2 trillion to oil, natural gas and coal,” the report notes.
The major reason this trend is expected to continue, the IEA says, is down to the global uncertainty that is being experienced.
“Given that the world is facing the largest energy security threat in history, this report is being released at a time of profound uncertainty for investors and policymakers. As with previous energy shocks, many of the impacts will become visible only later,” the agency points out.
According to the report, around three-quarters of anticipated 2026 energy investments are effectively locked in, based on decisions made well before the conflict began. However, no matter how and when this [Middle East conflict] crisis ends, it will leave a lasting mark on energy investment strategies and flows.
Taking a look at when the Ukraine conflict began, the bottleneck at the Strait of Hormuz, according to the agency, comes so soon after the global energy crisis of 2021-2023, that today’s conflict is expected to reinforce a strong prioritisation of energy security amongst decision-makers.
New Routes Charted
Within the Middle East, the IEA says the conflict has already sparked a search for new energy export routes to reduce excessive reliance on the Strait of Hormuz.
“Capital will also be required to repair damaged energy infrastructure. Our tracking suggests that more than 30 energy facilities in the Middle East have been damaged, either moderately or severely,” the report notes.
The facilities include refineries, petrochemical plants, upstream oil and gas production sites, and 2 of the 14 liquefaction trains at the huge Ras Laffan LNG complex – which could take several years to repair.
Additionally, approximately 20 tankers have been struck by missiles or drones. The agency says it is hard to assess the extent of the insurance or damage bill.
“The total repair bill is difficult to establish with any precision, but is set to run into tens of billions of dollars. Higher domestic financing needs within the region could reduce outward capital flows, which have been a growing source of financing for infrastructure and energy projects in other regions,” the IEA states.
According to the IEA, the Middle East conflict has thrown oil markets into turmoil, but the short-term guidance from oil companies on their 2026 investment plans has remained largely unchanged.
“Oil supply investments are expected to decline for the third year in a row, to less than US$ 500 billion in 2026, despite the revenue boost for most producers from higher oil prices,” the agency says on the current trends.
Middle East investments have been revised down because of the conflict the agency noticed, which will dramatically cut export income for producers like Iraq and Kuwait that lack alternatives to the Strait, and delay some projects.
Outside of the Middle East, short-term investment responses are constrained by uncertainty over the duration of the oil price spike but also by long project cycles, infrastructure bottlenecks, depleted exploration portfolios and tight offshore rig markets
