Global investments in oil projects are set to decline below US$500 billion in 2026, marking the third consecutive year of falling oil capital expenditures even as oil prices remain high [1, 2]. This drop is driven largely by supply disruptions caused by the ongoing conflict in the Middle East. The US-Israeli war on Iran has effectively closed the Strait of Hormuz, cutting off about one-fifth of the world's seaborne crude shipments and shaking confidence in this vital export route [1, 2].
The conflict has reduced export income for oil producers and spurred efforts by both producing and consuming countries to diversify energy trade routes and sources globally [1, 2]. Fatih Birol, executive director of the International Energy Agency (IEA), said, "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" [1]. He emphasized the accelerating steps taken by countries to broaden the geographic and technological base of their energy supplies [2].
Despite the decline in oil-specific spending, overall global energy investments are projected to grow slightly, reaching US$3.4 trillion in 2026. This includes increased capital flowing into power grids, energy storage, low-emissions fuels, nuclear, renewables, and electrification projects [1, 2].
Natural gas investments will see a substantial rise, hitting US$330 billion in 2026 — the highest level in a decade. This increase is driven mainly by new liquefied natural gas (LNG) export projects, especially from the United States and Qatar [1, 2].
The IEA released its World Energy Investment report on May 28, 2026, underscoring these trends of falling oil investment and broader energy security concerns in the context of the Middle East conflict [1].
Governments and investors now face the challenge of navigating this shifting energy landscape as they prepare for a period of heightened uncertainty. The next key milestone will be monitoring how these investment patterns evolve in the second half of 2026 amid ongoing geopolitical tensions and market responses.
