Oil investment declines while gas investment rises: IEA report
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.”