As the energy transition reshapes capital allocation, global energy spending is barreling toward a record $3.4 trillion, according to the International Energy Agency (IEA). However, IEA’s Executive Director has warned that markets will not return to normal in 2027, as energy security continues to shake up global markets. With the Middle East conflict exposing severe supply vulnerabilities as shipping transit through the Strait of Hormuz ground to a halt, the crisis has highlighted the critical need to diversify supplies and find new delivery routes.
While low-emissions technologies, nuclear, storage, and grid expansions pull in $2.2 trillion, leaving traditional oil, gas, and coal trailing behind, fossil fuel extraction is continuing to command a $1.2 trillion slice of the market.
Driven by persistent geopolitical energy shocks, global investments are fuelling a nuclear comeback and a surge in clean infrastructure deployment looking toward 2027. Fatih Birol, IEA’s Executive Director, has warned that markets will not revert to pre-war conditions in 2027.
Highlighting persistent supply security risks, high fuel pressures, and a rush toward clean tech and nuclear resilience, the ongoing supply vulnerabilities and diesel and gas constraints across Europe appear to be bringing in a permanent shift in how nations approach energy security and infrastructure investment.
The IEA has underlined a four-decade high in nuclear power construction alongside the broader $3.4 trillion investment wave, accelerating the race toward grids, efficiency, and storage. Birol is convinced the Hormuz crisis is leading governments to rethink energy priorities and to seek to diversify partners, trade routes, fuels, and technologies.
Given that the global energy crisis will continue to cast a long shadow into 2027, based on IEA leadership’s take on the situation, lingering supply bottlenecks and fractured trade routes are locking in a high-alert era for global energy security.
Back in May 2026, the IEA’s ‘World Energy Investment’ report outlined that the conflict in the Middle East was expected to make energy security a top priority among decision-makers, as its effects were being felt most directly in the Middle East and Asia, which had been the destination for 80-90% of energy exports from Gulf producers.
The International Energy Agency said at the time that the conflict was fortifying a shift towards security, trust, and diversity as key considerations when choosing energy projects and partners, alongside costs, prices, and environmental performance.
As a result, the IEA anticipated wide-ranging implications for the fuels and technologies that countries prioritize, where they get them from, and how they look to achieve other strategic energy objectives.
"Changing perceptions of risk and reliability are expected to spur renewed interest in a range of domestically available energy resources: for key fuel importers, this creates upside for renewables, nuclear and potentially also for coal. Renewable energy resources are widely distributed around the world, and preliminary signs indicate that deployment is picking up in some markets heavily affected by the energy crisis. Moreover, if it prompts a faster pace of electrification, the conflict will bring the Age of Electricity even more clearly into view: electricity-related spending already makes up nearly 60% of all global energy investment."
The Paris-based agency’s projections indicated that capital flows to the energy sector were expected to grow to $3.4 trillion in 2026, a 5% rise from 2025, mainly from China, the U.S., and the EU, with the clean energy investment set to grow to $2.2 trillion, almost double that of fossil fuels, as investment in clean energy increases year-on-year by 7% in advanced economies and in China, and 4% in other emerging markets, reflecting regional differences with a shared focus on energy security.
The IEA has noted that geopolitical tensions, supply restrictions, and market shocks are impacting the outlook looking into 2027, stressing persistent risks to energy security and fuel supplies, alongside surging costs and heightened demand for power infrastructure resilience, energy storage, and nuclear build-outs, which have hit multi-decade highs with roughly 90 GW under construction.
The total energy spending in the U.S. is set to rise by 6%, reaching almost $610 billion, with a nearly fourfold uptick in LNG spending in 2026, and battery storage, geothermal, and nuclear power emerging as investment drivers. The United States is expected to represent nearly half of global LNG export capacity by 2030.
The investment in the Latin American region is anticipated to increase to $190 billion in 2026, with fossil fuel supply spending continuing to rise, led by deepwater oil developments in Brazil and Guyana and continued activity in Argentina, Mexico, and Venezuela, and grids remaining a focus sector.
Energy investments in the European Union are projected to rise to $440 billion in response to energy security and affordability concerns, supported by diversification and accelerated electrification, with natural gas investment remaining important for security of supply, especially through LNG, with infrastructure investments reaching $17 billion in 2025.
Africa’s energy spending is forecast to reach $110 billion in 2026, dominated by fossil fuel spending, with growing interest in power generation, critical minerals, and transport, while upstream investment hit $37 billion in 2025, down from $68 billion in 2016, an 11% drop.
Investment remains highly concentrated in Algeria, Angola, Egypt, Nigeria, and Libya, which together account for 70% of investment, even though investment in these countries has fallen from $50 billion in 2016 to $25 billion in 2025. On the other hand, capital allocated to emerging producers such as Mozambique, Namibia, Senegal, and Uganda has grown since 2016.
The Middle East is continuing to attract energy investment, with natural gas and low-emissions technologies driving investment trends, but upstream oil and gas spending is projected to decline by around 1% in 2026.
Eurasia continues to keep fossil fuels as the primary energy source in the region, while investment in renewables, grids, and electrification is projected to reach $43 billion. While total energy spending remains dominated by oil and gas, at $77 billion, regional fossil fuel investment has fallen markedly from past highs.
There is a growing focus on power system reliability, grid expansion, and export resilience in countries such as Kazakhstan, Uzbekistan and Azerbaijan, which includes major public and foreign-backed projects in solar, wind, storage, hydropower and transmission infrastructure.
China’s energy investment priorities are shifting from capacity expansion toward broader system strategy, with grid expansion and green finance underpinning energy transition, based on the IEA’s report. The country’s spending is forecast to hit $945 billion in 2026, with grid investment expected to rise sharply to $140 billion, playing a central role in integrating recent renewable additions, supporting electrification, and strengthening energy security.
India’s energy investment is projected to climb to $170 billion, driven by a surge in investment in solar PV and oil refining, as for every dollar invested in fossil-based generation, the country invests three in renewables and nuclear power.
Japan and Korea’s investment in dispatchable generation is becoming increasingly important for electricity security, while the region is expanding critical mineral investments to reduce supply chain risks by combining transition-related spending with a strong focus on energy security, with total investment projected to reach $122 billion.
Southeast Asia’s energy investment continues to grow, with spending on renewables, grids, and end-use sectors anticipated to jump to $57 billion in 2026, as the region’s electricity demand is increasing 1.5 times faster than the global average, with the momentum building for cross-border electricity trade through the ASEAN Power Grid (APG), with $27 billion needed for cross-border interconnections by 2040.