Industry

The global economic outlook has deteriorated sharply in recent weeks, and the fallout from the Middle East crisis is expected to hit the Middle East and North Africa the hardest, according to the latest edition of the World Economic Forum’s Chief Economists’ Outlook

Nearly nine in ten chief economists surveyed expect global growth to weaken over the next 12 months, in contrast to the cautious optimism seen at the start of the year, as conflict in the Middle East and the closure of the Strait of Hormuz fuel concerns over a major global economic shock.

Chief economists expect that If the closure of the Strait of Hormuz persists into the second half of the year, its impact could approach the severity of the COVID-19 crisis, compounding effects across global supply chains, energy and food costs. An overwhelming 94% of the surveyed chief economists expect global inflation to increase over the coming year.

“Only months ago, the Chief Economists community was cautiously optimistic. The conflict in the Middle East changed that, and the economic scarring from the situation thus far is already expected to last into the months ahead,” said Saadia Zahidi, managing director, World Economic Forum. “The longer the disruption lasts, the heavier the long-term cost for those who can least afford it.”

Uneven regional outlook

The Middle East and North Africa region is the hardest hit. After being viewed as one of the brighter economic regions only months ago, 88% of the surveyed chief economists now expect weak or very weak growth – the sharpest regional reversal in the survey – a direct reflection of the conflict, higher regional food exposure, and weaker employment prospects. Elsewhere, the outlook is mixed: inflation expectations have climbed sharply in sub-Saharan Africa, while Europe faces mounting stagflation risks as growth weakens and inflation fears mount. By contrast, India and the United States are expected to remain relatively resilient, supported by domestic demand and investment. This edition also examines how multinational companies are recalibrating investment and supply chains in a more fractured risk environment, with the US, India and South-East Asia seen as the most attractive business locations.

Despite the sharp deterioration, most of the chief economists do not expect a recession within the next 12 months, even as they see little prospect of the economy growing more resilient in the near term. Much will depend on the length of the disruption: a shorter shock could leave room for recovery, while a prolonged closure would deepen the strain on the global economy. Financial markets are expected to come under increasing strain, with 79% of respondents anticipating rising volatility in private debt markets over the next year; 74% also expect public debt market volatility to increase and 68% expect stock market volatility to increase.

The Chief Economists’ Outlook builds on consultations and surveys with leading chief economists from the public and private sectors, organised by the World Economic Forum’s Centre for the New Economy and Society.

LNG investment is expected to more than double in 2026 compared with 2025. (image source: Adobe Stock)

Oil investment is set to decline for a third consecutive year, while natural gas investment is projected to rise to the highest level in a decade, according to the 2026 edition of the IEA’s annual World Energy Investment report

Despite higher oil prices, oil investment is expected to fall below US$500bn, as uncertainty over the duration of the price spike, long project lead times, supply chain constraints and tighter offshore rig markets limit spending outside the Middle East.

Global upstream investment is expected to rise marginally in 2026, with declines in the Middle East and North America offset by increases mainly in Central and South America and Africa, but new refinery investment is expected to fall to decade-level lows.

At the same time, natural gas investment is projected to rise to US$330bn, supported by a wave of new LNG export projects, particularly in the USA and Qatar. LNG investment is expected to more than double in 2026 compared with 2025 as more than 230 bcm of projects advance toward peak construction.

The report highlights that the impact of the conflict in the Middle East and the effective closure of the Strait of Hormuz is prompting countries and companies to reshape energy investment strategies with a focus on security and diversification, particularly in Asia and the Middle East.

The report projects that total global energy investment will reach US$3.4 trillion in 2026, a slight increase year-on-year. Around US$2.2 trillion is expected to go to grids, storage, low-emissions fuels, nuclear, renewables, efficiency and electrification in 2026, while around US$1.2 trillion is set to be invested in oil, natural gas and coal.

Electricity and diversification drive spending

Electricity and diversification are driving growth in energy spending with countries seeking to respond to the second energy crisis in five years with new routes and domestically available resources. There is a growing focus among fuel-importing countries on domestic energy sources including renewables, nuclear power and, in some cases, coal. Investment in renewable power projects is expected to total around US$665bn in 2026, with US$365bn going toward solar alone. Nuclear investment is continuing its resurgence, exceeding US$80bn annually, with close to 80 gigawatts of new nuclear capacity under construction across 15 countries.

Coal investment, meanwhile, is also set to rise to US$180bn in 2026, the highest level since 2012, with China accounting for almost 70% of global coal supply spending. The report notes that some Asian countries may seek to keep existing coal-fired power plants operating for longer to bolster energy security.

Electricity-related investment remains a dominant theme. Investment in electricity supply and infrastructure is expected to reach nearly US$1.6 trillion in 2026 with spending on electricity grids projected to approach US$550bn, up nearly 20% year-on-year, while battery storage investment is set to exceed US$100bn.

The electricity demands of the rapid expansion of data centres and artificial intelligence are also becoming a major influence on energy investment trends in some markets, particularly in the USA. Orders for new gas-fired power plants reached a 25-year high in 2025, with data centre needs playing a significant role.

The report highlights an increased focus on energy efficiency as a result of the crisis, although there are plenty of gaps that need to be filled.

The report notes that the Middle East conflict is impacting the availability of finance for future energy projects, triggering volatility within financial markets, slowing investment decisions in the short term and pushing up long-term financing costs. This could disproportionately affect capital-intensive energy technologies, the report warns, particularly in emerging and developing economies where financing costs are already significantly higher than in advanced economies.

“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, with parallels to the major changes the energy world witnessed after the oil shocks of the 1970s,” said IEA executive director Fatih Birol. “We are already seeing intensified efforts by both producer and consumer countries to diversify trade routes and energy sources – such as advancing new pipelines and other supply infrastructure, on the one hand, and turning more to domestically available resources, on the other. These range from renewables and nuclear to coal, oil and gas, in some cases – as well as broader measures to strengthen electricity systems, expand electrification and accelerate energy efficiency.”

TCP is a strong, non-corrosive, spoolable, lightweight technology which is delivered in long lengths. (Image source: Strohm)

Leading thermoplastic composite pipe (TCP) manufacturer Strohm has won a contract to supply a 2,000m flowline for one of the West Delta Deep Marine (WDDM) projects offshore Egypt

The project is operated by Burullus Gas Company, a joint venture between EGAS, Shell and Petronas.

It represents Strohm’s first contract in Egypt as well as being the first use of this type of TCP solution in the region, according to the company.

The carbon fibre and PA12 polymer TCP flowline has a design pressure of 5,000psi and is qualified to DNV-ST-F119 standard. It will be installed by Oceaneering International at water depths of almost 600m, replacing an existing steel flowline. It will be installed using the highly flexible and cost effective horizontal lay method, enabling the use of a multi-purpose vessel and avoiding the need for specialised installation vessels

TCP is a strong, non-corrosive, spoolable, lightweight technology which is delivered in long lengths, resulting in a significant reduction of transportation and installation costs. it is installed using small vessels or subsea pallets, significantly reducing CO2 emissions, and is also 100% recyclable.

Norman Lentsch, Strohm’s business development manager for Africa, said, “This contract marks an important milestone for us as we enter the Egyptian market for the first time. We are proud to work with Oceaneering International and Burullus Gas Company as we support the region’s growing energy infrastructure needs with our high-quality flowline solutions.”

“Our entry into the local market underscores the confidence operators have in our TCP products, our extensive track record and our ability to deliver consistent quality and performance. We look forward to demonstrating Strohm’s commitment to safety and excellence.”

Chris Dyer, senior vice president at Oceaneering’s Offshore Project Group, added, “At Oceaneering, we have extensive experience installing flexible products, including TCP. By leveraging our umbilical product installation capabilities to support TCP installations, we can maximise our assets globally and streamline project execution, providing tangible benefits to the end user in overall project cost and schedule."

Wood will optimise the complex pipeline network. (Image source: Wood)

Consulting, engineering and operations provider, Wood, has been contracted by China Offshore Oil Engineering Company (COOEC) for QatarEnergy’s Bul Hanine EPIC2 project offshore Qatar

The contract secures scope for delivery of a detailed design for QatarEnergy’s Bul Hanine EPIC2 project offshore Qatar. 

The field is characterised by a complex pipeline network to which Wood will find an optimised approach for boosted production capacity and extended asset lifetime, drawing on extensive subsea engineering and flow assurance expertise.

Wood will undertake the design of 25 pipelines, including ensuring safe interaction where pipelines cross existing infrastructure and managing thermal expansion to protect long-term integrity, alongside crossing analysis for 15 umbilicals and two power cables.

Gerry Traynor, regional president - Middle East, Africa & Caspian, at Wood, said, “Wood has a strong track record in delivering offshore detailed design and in optimising installation solutions for complex subsea systems. By working collaboratively with COOEC, we are bringing together complementary strengths that will help accelerate QatarEnergy’s ambition to extend the field’s life, increase capacity and boost production from these critical, ageing assets.”

Wu Zhixing, Deputy Director of COOEC Engineering Company, said, “COOEC is glad to be QatarEnergy's trusted partner for the Bul Hanine EPIC2 Project. This is an important milestone which will build on our continual strong track record in the industry, strengthens our presence and commitment to support the energy landscape in the Middle East, and a testament of COOEC's capability in delivering a trusted EPIC solution for mega offshore projects.”