The IEA's own Executive Director called it, in May 2026, the largest energy security crisis the world has ever confronted — not about Ukraine, but about the Strait of Hormuz. Global energy investment is set to hit $3.4 trillion this year regardless, but the composition has shifted hard: toward grids, nuclear, and domestically-controlled supply, away from anything that depends on a shipping lane someone else can close.
The IEA's 2026 World Energy Investment report is explicit that this is a repeat pattern, not a one-off: the effective closure of the Strait of Hormuz during the 2026 Middle East conflict is the second major global energy supply shock in five years, following Russia's 2022 invasion of Ukraine. Both events share a structural lesson governments have now internalised twice — dependence on a single chokepoint, whether a pipeline or a shipping lane, is a strategic vulnerability that gets exploited exactly when it's least convenient.
The investment numbers show the lesson landing in real capital allocation, not just rhetoric. Global energy investment is projected to reach $3.4 trillion in 2026, a 5% year-on-year increase despite the disruption. Roughly $2.2 trillion of that flows to grids, storage, low-emissions fuels, nuclear, renewables, efficiency, and electrification — the domestically-controllable half of the energy system. Around $1.2 trillion goes to oil, gas, and coal, and even within that fossil allocation, the shift toward diversification is visible: oil investment is set to decline for a third consecutive year despite higher prices, while natural gas investment rises to $330 billion — the highest in a decade — driven specifically by new LNG export capacity in the US and Qatar, chosen precisely because it doesn't require sailing through a contested strait.
Electricity infrastructure is where the security instinct shows up most clearly. Grid spending alone is projected at roughly $550 billion in 2026, up nearly 20% year-on-year. Battery storage investment will exceed $100 billion. Orders for new gas-fired power plants hit a 25-year high in 2025 — with data center demand from the AI buildout this publication has covered extensively (Letters 134, 144) now a direct, named driver of that surge alongside the security motive.
The current supply shock is expected to leave a lasting imprint on future investment priorities — not because any single country decided to decarbonise faster, but because every fuel-importing nation just relearned the cost of not controlling its own supply.
Nuclear investment has crossed $80 billion annually with close to 78 gigawatts of new capacity under construction across 15 countries — a genuine resurgence, not a rounding error. China alone accounts for nearly one-third of global nuclear investment, but the pipeline now spans well beyond the countries that never abandoned nuclear in the first place. The appeal is specific to the current crisis: nuclear fuel is stockpileable and geographically diversifiable in a way pipeline gas and strait-dependent oil are not.
More than 100 billion cubic metres of new LNG export capacity was approved in 2025 alone, with nearly 90% of those approvals in the United States. Natural gas investment overall is projected at $330 billion in 2026 — the highest level in a decade — specifically because LNG carried by ship can route around a closed strait in a way pipeline gas cannot. Qatar is the other major approval hub, meaning the two dominant new LNG sources are, not coincidentally, the two suppliers with the most diversified shipping-route options.
Whether a country bets on nuclear, gas, renewables, or all three, every path runs through the same electricity grid — and that grid is the one piece of energy security infrastructure with no substitute. Grid spending is set to reach roughly $550 billion in 2026, up nearly 20% year-on-year, with battery storage investment exceeding $100 billion for the first time. Renewable power investment itself remains substantial at $665 billion, with solar alone drawing $365 billion — nearly $1 billion a day — even as the broader narrative shifts toward security over pure decarbonisation.
This publication's Letter 150 (The Age of Strategic Scarcity) argued governments now pay above-market prices for resilience in critical minerals. The exact same logic is visible here in energy: the IEA's own framing — "the largest energy security crisis the world has ever faced" — is a government-and-market consensus that domestic and diversified energy control is worth paying for, even when it costs more than the strait-dependent alternative. The gas-fired power plant order backlog hitting a 25-year high, driven partly by AI data center demand, is the direct intersection of this trajectory with this publication's own data center coverage (Letters 134, 144) — energy security and the AI buildout are now, functionally, the same capital allocation decision for utilities and grid operators.
This is the second crisis in five years, and the IEA is explicit it won't be the last. The structural response — diversify away from any single chokepoint — is being priced into $3.4 trillion of 2026 investment, but the underlying vulnerability (concentrated shipping lanes, concentrated pipeline routes) isn't fully solved by any single year's capital allocation.
Coal is quietly rising too, and that's a real cost of the security-first pivot. Coal investment is set to reach $180 billion in 2026 — the highest since 2012 — with China accounting for nearly 70% of that spend, and some Asian countries extending the life of existing coal plants specifically to hedge against further Middle East disruption. Energy security and decarbonisation are not always pulling in the same direction, and this letter won't pretend otherwise.
Oil investment declining for a third straight year, even with high prices, is the clearest signal of where capital actually believes the future sits. Long project lead times, tighter offshore rig markets, and genuine uncertainty about how long the current price spike lasts are all cited by the IEA as reasons capital isn't chasing the oil price rally the way it once would have.
Grid and electrification spending is the least glamorous, most investable part of this trajectory. Unlike picking a winning nuclear technology or LNG project, grid infrastructure investment is diversified by construction, benefits from every other energy path simultaneously, and is growing at nearly 20% year-on-year with no credible scenario in which it reverses.
Part of an ongoing journal — observations recorded when something in the world economy is worth saying. No schedule. No noise. Not investment advice.