The war in the Middle East has triggered the largest disruption to global oil and gas markets in history. Since the conflict began in February, shipping through the Strait of Hormuz – a narrow artery through which roughly a quarter of the world’s seaborne oil and one-fifth of its natural gas normally transits – has been repeatedly obstructed. The upheaval has brought renewed attention to the region’s pivotal role in ensuring secure energy supplies around the world. But the implications of the crisis for the Middle East itself have been no less profound.

Across the region and into North Africa, the crisis is taking a heavy toll. Governments are grappling with fuel shortages, soaring import bills, higher energy prices and lost export revenues. For many, these pressures are forcing increasingly difficult choices between protecting households and businesses, ensuring stability and safeguarding already strained public finances.

The region’s highly diverse energy landscape also means the effects of the conflict are unfolding in different ways. Some major oil and gas exporters producers are losing export revenues even as international prices surge. Import-dependent economies, meanwhile, are paying more to secure the energy they need, driving up bills for consumers. And in countries already struggling with conflict and fragile infrastructure, reliable access to fuel and electricity is becoming harder still.

For many of the region’s oil and gas producers, soaring prices have not necessarily translated into windfall earnings. With trade flows through the Strait of Hormuz disrupted and physical energy infrastructure under attack, a number of resource-rich countries have faced major challenges to continue exporting and to benefit from the surge in international benchmark prices – some have seen their export volumes drop far below their pre-war levels. Several are also facing severe shortages of fuel and electricity at home.

Among producers, fortunes have diverged sharply. Saudi Arabia and the United Arab Emirates (UAE) have been able to maintain most of their shipments thanks to long-term investments in pipelines bypassing the Strait. Saudi Arabia has redirected oil via its East-West pipeline to the Red Sea port of Yanbu, while the UAE’s West-East pipeline to Fujairah offers another outlet to global markets.

Others have had far fewer options: Bahrain, Iraq, Kuwait and Qatar remain heavily reliant on the Strait, leaving their export volumes and revenues exposed. In Qatar, around 97% of liquid natural gas (LNG) exports have been affected by the closure.

Iraq provides one of the most striking examples of how quickly an export crisis can become a domestic energy crisis. With exports through the country’s southern ports – which normally handle the vast majority of its oil shipments – curtailed by the near-closure of the Strait and limited storage capacity, Iraq was forced to shut in oil production earlier than many of its neighbours. By May, as the country’s oil production fell, its associated natural gas production was also down by an estimated 15.6 million cubic metres per day (mcm/d), or 60% below its pre-war levels. This, coupled with the loss of gas imports from Iran, severely impacted the country’s already strained electricity sector and left an estimated 35 gigawatts (GW) shortfall during the summer peak.

The current crisis has also amplified pre-existing vulnerabilities in Iraq’s fuel system, especially for gasoline. Insufficient domestic production and the loss of imports through the Strait have left Iraq facing a shortfall of around 6 million litres per day. These shortages – as evidenced by the long queues for cars at petrol stations across the country – have ignited intense public and political debates over the state of energy infrastructure and planning in the second-largest oil producer in OPEC.

Libya faces a similar paradox. Despite holding Africa’s largest oil reserves, it produces only around a third of the fuel it consumes and spends about USD 1 billion a month on imports. With limited storage capacity, even brief tanker delays can quickly turn into shortages, while a recent drone strike on the Zawiya refinery further cut supply. During the summer, shortages of gas and fuel for power stations led to electricity cuts exceeding 14 hours a day in some areas.

For countries entirely reliant on imported energy, the crisis has brought a different kind of pressure. They are particularly exposed to rising international fuel and shipping costs, which have rapidly translated into higher transport, electricity and household energy expenses and left governments facing difficult choices over how much of the burden to pass onto consumers.

Across Egypt, Morocco, Tunisia and Lebanon, combined monthly spending since January on crude oil, oil products and natural gas climbed by nearly 60% to USD 4.6 billion in March – the first full month of the conflict – and reached USD 4.8 billion in June, or roughly 66% higher than at the start of the year. Oil products accounted for most of the jump, while the natural gas bill doubled over the period, driven mainly by Egypt’s LNG imports. For economies already facing fiscal constraints, the additional expense has left less room to support households and businesses or invest in other priorities, including energy reforms.

Across much of the region, governments have historically relied on energy subsidies to shield households and businesses from market volatility. This approach has played a key role in maintaining affordable energy, particularly during periods of high prices, and remains widespread among both producer economies and net energy importers.

In Egypt, the cost of fuel imports nearly doubled between January and June 2026, placing additional strain on public finances. In response, authorities raised most household electricity tariffs by an average of 12% in July, while maintaining protections for the lowest-income consumers. Electricity subsidies there amount to around USD 1.9 billion annually.

Yet the current crisis is exposing the limits of that model: the Middle East and North Africa (MENA) is the only region in the world where producing a unit of gross domestic product (GDP) required more energy in 2023 than at the start of the century, putting it at odds with the global economy – which has seen energy intensity fall steadily since 2000. Subsidies have traditionally weakened price signals, encouraged excessive consumption and contributed to rapid growth in domestic energy demand, even as public finances come under increasing strain.

On average, the MENA region spent around USD 250 billion annually on fossil fuel subsidies over the past decade – close to the entire GDP of Iraq – while in 2023, electricity subsidies alone exceeded USD 80 billion. In several countries, governments are finding it increasingly difficult to absorb higher energy costs. Syria, for example, has already been forced to remove electricity subsidies and raise fuel prices.

In countries already dealing with conflict – or recovering from its effects ranging from economic instability to damaged infrastructure – the crisis is making an already precarious energy situation worse. Disruptions to fuel supplies and rising prices threaten not only transport and economic activity, but also the electricity needed to run hospitals, water systems and other essential services – exposing the severe human cost of energy disruptions.

In Lebanon, where electricity supplies have long been unreliable, higher fuel costs are adding to the burden on households and businesses that depend on private generators. The country imports approximately 95% of its energy in the form of fuel oil and diesel – with the vast majority used for power generation – leaving it highly exposed to market fluctuations. The damage to critical energy infrastructure – including power substations, transmission lines, and diesel generators – has further undermined access to reliable energy services. Rising energy costs are also exacerbating food insecurity, with higher transport and production costs feeding through into food prices.

The consequences are particularly severe in Yemen and Gaza, where conflict has left energy systems highly vulnerable. Yemen has experienced regular protests against power cuts during the summer months, coinciding with an upswing in cooling demand. Before war erupted in Yemen in the early 2010s, the country’s electrification rate was already the region’s lowest at around 45%. Yemen also has some of the lowest levels of electricity use globally, consuming just 243 kilowatt-hour per capita each year.  In Gaza, meanwhile, the near-total collapse of the electricity system has compounded a massive humanitarian crisis. Gaza has been without grid electricity since October 2023, when its sole power plant shut down due to fuel shortages. Since then, hospitals, water services and households have become heavily reliant on scarce fuel supplies and financially unsustainable generator-based electricity.

The current crisis has exacerbated vulnerabilities that existed long before the war, offering an opportunity for a broader approach to energy security across the Middle East and North Africa.

For import-dependent economies, reducing exposure to volatile international fuel markets means scaling up domestic sources of electricity, including renewables. For producers such as Iraq and Kuwait, diversifying export routes would help protect revenues against future disruptions. Across the region, stronger electricity and gas interconnections could allow countries to share supply during crises rather than face them alone.

Making energy more affordable will also require rethinking subsidies. Targeted support, such as Egypt’s “Takaful w Karama” cash transfer programme, highlighted in the IEA report The Future of Electricity in the Middle East and North Africa, offers a way to keep energy affordable for the most vulnerable while easing pressure on public finances. This and other IEA analysis offer a deeper understanding of the correlation between energy subsidies and energy sector resilience across the region.

In countries affected by conflict and fragile infrastructure, the challenge goes beyond affordability: energy may not be available at all. Several countries and territories in the region are experiencing active conflict or fragile ceasefires – Sudan, Yemen, Gaza and Lebanon  – or still recovering from war, in the case of Iraq, Syria and Libya. And while most households are connected to the power grid, in many places it supplies only a few hours of power each day, leaving families and businesses heavily dependent on costly diesel generators. In Lebanon, private generators supplied around half of the country’s electricity at the start of 2026, with households often paying around USD 300 a month for a subscription.

Higher fuel prices are hitting vulnerable households hardest. Governments must ensure that energy poverty does not take hold across the region. Distributed renewables such as rooftop solar, mini-grids and solar water pumps all have an important role to play: they can be deployed relatively quickly, do not depend on fuel deliveries and are less exposed to attacks than large, centralised plants. Solar has already become a main source of power for many in Yemen, and rooftop installations have spread rapidly in Lebanon since 2022. Targeted finance to lower upfront costs, particularly for essential services such as hospitals and water supply, could extend these benefits to the most vulnerable.

For oil and gas producers, repeated disruptions through the Strait have reinforced the need to diversify export routes and invest in resilient infrastructure. Saudi Arabia, the UAE and Iraq have already announced significant projects to expand pipeline capacity and provide alternative routes to global markets. The UAE is projected to double its transport capacity to Fujairah, while Saudi Arabia is considering expanding the capacity of its 7 million barrels per day East-West pipeline in addition to building a pipeline to the Omani port of Duqm that can bypass the Strait. Iraq plans to refurbish its internal strategic pipeline, allowing it to move oil from the country’s oil-rich south up to Türkiye via an existing pipeline, or through Syria.

The crisis is ultimately redefining what energy security means for the region most directly affected by the Iran war. For major producers, abundant resources are no guarantee of export revenues or reliable energy supplies. For import-dependent economies, affordability is an increasingly pressing concern. And in countries with fragile energy systems, the immediate priority remains access to fuel. Across the Middle East and North Africa, energy security will depend on countries’ ability to deliver reliable, affordable energy at home.

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