• Combined monthly fuel import spending in Egypt, Morocco, Tunisia and Lebanon rose by about 66% to US$ 4.8 billion in June, compared with the start of the year.
• Shipping disruption through the Strait of Hormuz has cut export volumes for several producers, while Iraq and Libya face fuel shortages and prolonged power cuts at home.
• The International Energy Agency (IEA) says distributed renewables, targeted subsidies, new export routes and stronger interconnections will define energy security in the region.

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The war in the Middle East has triggered the largest disruption to global oil and gas markets in history, and its effects are being felt acutely across the Middle East and North Africa (MENA), according to new IEA commentary by Nadim Abillama and Matthew Van der Beeuren. Since the conflict began in February, shipping through the Strait of Hormuz has been repeatedly obstructed. The strait normally carries roughly a quarter of the world’s seaborne oil and one fifth of its natural gas.

Governments from the Gulf to North Africa are contending with fuel shortages, higher energy prices, soaring import bills and lost export revenues. The IEA notes that the impact varies widely, with producers, importers and conflict affected states each facing a distinct set of pressures.

For oil and gas producers, higher international prices have not automatically meant windfall earnings. Saudi Arabia and the UAE have maintained most of their shipments thanks to long term investment in pipelines that bypass the strait. Saudi Arabia is redirecting oil through its East West pipeline to the Red Sea port of Yanbu, while the UAE uses its West East pipeline to Fujairah. Bahrain, Iraq, Kuwait and Qatar remain heavily dependent on the strait, and around 97% of Qatar’s LNG exports have been affected by the closure.

Iraq shows how quickly an export crisis can become a domestic one. With southern ports curtailed and storage limited, the country shut in oil production earlier than many neighbours. By May, associated gas output had fallen by an estimated 15.6 million cubic metres per day, or 60% below pre war levels. Combined with the loss of gas imports from Iran, this left an estimated 35 GW shortfall in electricity supply during the summer peak. Iraq also faces a gasoline shortfall of around 6 million litres per day, which has led to long queues at petrol stations and intense political debate.

Libya presents a similar paradox. Despite holding Africa’s largest oil reserves, it produces only around a third of the fuel it consumes and spends about US$ 1 billion a month on imports. Limited storage means short tanker delays quickly become shortages, and a recent drone strike on the Zawiya refinery cut supply further. Some areas experienced power cuts of more than 14 hours a day over the summer.

Import dependent economies are under a different kind of pressure. Combined monthly spending on crude oil, oil products and natural gas across Egypt, Morocco, Tunisia and Lebanon climbed by nearly 60% to US$ 4.6 billion in March, the first full month of the conflict, and reached US$ 4.8 billion in June. Oil products drove most of the increase, while the natural gas bill doubled, mainly because of Egypt’s LNG imports.

In Egypt, the cost of fuel imports nearly doubled between January and June 2026. Authorities raised most household electricity tariffs by an average of 12% in July, while maintaining protections for the lowest income consumers. Electricity subsidies in Egypt amount to around US$ 1.9 billion annually.

The IEA argues the crisis exposes the limits of the region’s long standing subsidy model. MENA is the only region in the world where producing a unit of GDP required more energy in 2023 than at the start of the century, while global energy intensity has fallen steadily since 2000. Over the past decade the region spent around US$ 250 billion a year on fossil fuel subsidies, close to the entire GDP of Iraq, and electricity subsidies alone exceeded US$ 80 billion in 2023. Syria has already been forced to remove electricity subsidies and raise fuel prices.

Countries already affected by conflict face the most severe risks, with fuel disruption threatening power for hospitals, water systems and other essential services. Lebanon imports approximately 95% of its energy as fuel oil and diesel, most of it used for power generation, and damage to substations, transmission lines and diesel generators has further weakened supply. Private generators supplied around half of the country’s electricity at the start of 2026, with households often paying around US$ 300 a month for a subscription.

Yemen had an electrification rate of around 45% before war erupted, the lowest in the region, and consumes just 243 kilowatt hours per capita each year. Gaza has been without grid electricity since October 2023, when its sole power plant shut down because of fuel shortages.

Looking beyond the crisis, the IEA says reducing exposure to volatile fuel markets means scaling up domestic electricity sources, including renewables, in import dependent economies. Stronger electricity and gas interconnections would allow countries to share supply during crises. The agency also points to targeted support such as Egypt’s Takaful w Karama cash transfer programme, highlighted in its report The Future of Electricity in the Middle East and North Africa, as a way to protect vulnerable consumers while easing pressure on public finances.

Distributed renewables such as rooftop solar, mini grids and solar water pumps can be deployed relatively quickly, do not rely on fuel deliveries and are less exposed to attack than large centralised plants. Solar has become a main source of power for many in Yemen, and rooftop installations have spread rapidly in Lebanon since 2022. The IEA says targeted finance to lower upfront costs, particularly for hospitals and water supply, could extend these benefits to the most vulnerable.

Producers are also acting. Saudi Arabia, the UAE and Iraq have announced significant projects to expand pipeline capacity and create alternative routes to market. The UAE is projected to double its transport capacity to Fujairah, while Saudi Arabia is considering expanding its 7 million barrels per day East West pipeline and building a new line to the Omani port of Duqm that bypasses the strait. Iraq plans to refurbish its internal strategic pipeline to move oil from the south to Türkiye, either through an existing line or via Syria.

The IEA concludes that abundant resources no longer guarantee export revenues or reliable supply for major producers, affordability is the pressing concern for importers, and access to fuel remains the immediate priority in fragile states. Across MENA, energy security will depend on delivering reliable, affordable energy at home.

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Author: Bryan Groenendaal

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