Global energy markets shift toward gas, renewables and nuclear as supply shocks reshape import strategy

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Global energy markets shift

Highlights

IEA estimates cumulative oil supply losses at 1.3 billion barrels by June 2026 due to Strait of Hormuz closure and Qatar attacks, sharply raising gas prices.
Global energy investment to reach $3.4 trillion in 2026, with $2.2 trillion for grids, renewables and non-fossil technologies, while oil investment falls below $500 billion.
Countries including Japan, South Korea, Italy and Germany delay coal phaseouts and boost nuclear support as renewables' intermittency and supply insecurity drive diverse capacity reliance.

Supply disruptions reset energy planning

As reported by Financial Times, the latest wave of disruption follows the return of relative calm in energy markets by February 2026 after the 2022 crisis triggered by Russia's full-scale invasion of Ukraine. That earlier shock left the EU short of fuel for two years, while tighter spot supply and higher prices also affected African and Asian buyers.

The energy system is thrown off balance again after the late-February attack by the U.S. and Israel on Iran. Before the conflict closed the Strait of Hormuz, the chokepoint carried one-fifth of seaborne gas and a quarter of seaborne oil; by June, the International Energy Agency estimates cumulative oil supply losses at 1.3 billion barrels. Attacks on energy infrastructure in Qatar, a key liquefied natural gas supplier to Europe and Asia, also send gas prices sharply higher for the second time in four years.

Importing countries respond by seeking more secure supply arrangements. Some Asian nations move away from spot markets and negotiate longer-term fixed-price LNG contracts, while African buyers increase purchases from the U.S. and Argentina.

Investment pivots to lower-risk energy sources

The International Energy Agency says the Middle East conflict has already influenced sourcing preferences. In its 2026 World Energy Investment report, the agency says global energy investment reaches $3.4 trillion in 2026, including $2.2 trillion for grids, renewables, storage and other non-fossil fuel technologies.

Within that total, oil investment is expected to fall below $500 billion, while gas investment rises by $330 billion and renewables by $665 billion. Although many investment decisions in the report predate the conflict, the broader direction points to stronger interest in alternatives to imported fossil fuels.

In the short term, however, countries are also relying on available conventional capacity. Japan, South Korea, Italy and Germany are among those bringing underused coal plants back to full capacity or delaying phaseout plans as they try to cover disruptions in oil and gas markets.

Nuclear power is also regaining support as a large-scale, lower-emissions source of stable generation. The World Nuclear Association says 440 reactors now supply nearly 10 per cent of global electricity, and the International Atomic Energy Agency estimated in November 2025 that worldwide nuclear capacity could double by 2050.

Renewables remain central to longer-term strategy because solar, wind and hydropower are often located on sovereign territory and are less exposed to imported fuel supply chains. China continues to lead the world in renewables capacity, with about 60 per cent of its installed power base coming from renewable sources, though those assets meet about 40 per cent of demand because of intermittency.

A faster shift is also visible in Africa, where Egypt is expanding solar deployment and cheaper, more efficient batteries could support wider adoption. Even so, analysts say a lasting change in the global energy mix may still depend on oil, petrol and diesel prices staying high enough for long enough to force structural market adjustment.

Our earlier article on the WTO’s warning about lasting trade impacts from the Ukraine and Middle East wars explained how repeated disruptions are pushing companies to redesign supply chains and reroute shipping for resilience, even at higher cost. It also highlighted the projected contraction in Middle East trade and the expectation that diversification and more regionalized trade patterns could persist even if key routes reopen.

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