Global Oil Investment Set To Fall Below $500bn In 2026 – IEA

Global investments in oil projects are due to fall for the third year in a row, as the supply shock from the Middle East conflict shifts priorities toward new trade routes and alternative energy sources.

According to the International Energy Agency’s annual World Energy Investment report published Thursday, spending on oil projects is set to drop below $500 billion in 2026 despite rising crude oil prices.

Oil markets have been in turmoil since the US-Israeli war on Iran effectively closed the Strait of Hormuz, through which a fifth of the world’s seaborne crude was shipped. The disruption has caused price spikes and supply shortages in several parts of the world, forcing companies and countries to rethink their energy investment strategies.

“We are in the midst of the largest energy security crisis the world has ever faced — and I believe this will reshape investment strategies globally,” IEA Executive Director Fatih Birol said in a statement. “We are already seeing intensified efforts by both producer and consumer countries to diversify trade routes and energy sources.”

Overall energy investments are expected to rise slightly to $3.4 trillion in 2026, with most of the spending directed toward power grids, storage, low-emissions fuels, nuclear energy, renewables, and electrification. Key fuel importers are now looking for domestic energy resources, mainly renewables, nuclear, and coal.

Gas spending is projected to rise to $330 billion, the highest level in a decade, supported by a wave of new liquefied natural gas export projects, mainly in the US and Qatar, the Paris-based agency said in its first full-year estimates for 2026.

In the Middle East, the war has cut export income and sparked a search for new export routes, as confidence in the reliability of the Strait of Hormuz has been “profoundly shaken.” In addition, the tens of billions of dollars required to repair facilities “could reduce outward capital flows, which have been a growing source of financing for infrastructure and energy projects in other regions.”

Birol has previously warned that the world is losing 14 million barrels of oil per day because of the war. Earlier this month, he said the IEA was ready to take further action after members agreed in March to release 400 million barrels from emergency reserves into the market in the biggest-ever discharge.