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2026 has been both a blessing and a curse for Egypt, energy-wise. Like much of the world, Egypt’s gas and oil supply has become strained due to the Iran war. The country has lost key Kuwaiti supplies, now turning to its neighbor Libya as an alternative. Egyptian Prime Minister Mostafa Madbouly also reported that the country’s energy bill had increased by $1.1 billion since the start of the war.

Yet with this downturn has come also new energy momentum. The year has seen Egypt make a string of new gas discoveries. In April, Denise West, an offshore Mediterranean well, was uncovered, containing an estimated 2 trillion cubic feet (TCF) of gas. Similarly, the South Bostan-1X was found in the Western Desert, holding an estimated 330 billion cubic feet (BCF) of gas.

Egypt’s LNG terminals sitting on the Mediterranean coast, built to export Egyptian gas, are importing foreign molecules to keep the lights on. But is the country’s energy sector on a new trajectory towards independence?

From Boom to Blackout

Contrary to what’s claimed by skeptics, Egypt’s ongoing energy woes are largely a recent phenomenon. The late 1990s and early 2000s saw Cairo experience an offshore exploration boom, especially in the Nile Delta basin. New gas discoveries prompted new energy infrastructure, such as the Arab Gas Pipeline (AGP) in 2003 and the Damietta and Idku liquefied natural gas (LNG) plants.

Yet as the decade turned into the 2010s, so too did Egypt’s energy fortunes. The country’s skyrocketing population growth–currently hovering at just below 1.5%–significantly accelerated its domestic fuel demand, while the political instability of the January 25 revolution saw heightened insecurity in the Sinai Peninsula, leading to repeated sabotage of the AGP and other key gas infrastructure.

While the 2015 discovery of the supergiant Zohr gas field by Eni, which holds an estimated 30 TCF of gas, had restored hopes of a return to Egypt’s energy glory days, shortages continued into the 2020s as demand grew.

By 2024, national natural gas production had collapsed by over 17% year-on-year to 47.47 bcm, forcing a complete halt to summer LNG exports and a return to extensive electricity load-shedding across the country. Egypt’s efforts to become a regional, self-sufficient energy hub are thus meant to be a cushion for not only the present, but a guaranteed future.

Winning Without Gas

Egypt’s saving grace is infrastructure built for a different era. While the Idku and Damietta liquefaction terminals were constructed to export Egyptian gas to Europe and Asia, they remain the only operational LNG export facilities in the Eastern Mediterranean.

Neither Israel’s Leviathan field nor Cyprus’ Aphrodite and Cronos fields can liquefy gas on their own; Egypt’s infrastructure can, amplifying the Eastern Mediterranean’s gas reach and making it by default the region’s processing node.

Whatever happens underground, Egypt has one energy advantage that requires no drilling: sunlight. The country’s southern desert receives some of the highest solar irradiance levels on earth, typically around 2,000-3,200 kWh/m² of direct solar energy per year.

Coupled with its Red Sea and Gulf of Suez coastlines being among the region’s most consistent wind corridors, Egypt’s solar energy potential is vast and untapped. The Benban Solar Park in Aswan, one of the largest in the world, is an early demonstration of that.

The longer-term bet is turning that natural endowment into an export product. The most ambitious vehicle for that is GREGY, a planned subsea cable stretching roughly 950 kilometers from Egypt to Greece, designed to carry Egyptian renewable power directly into the European grid.

The obstacles to realizing this are real, and they’re hurdles Egyptian officials are actively working to overcome. Transmitting solar power generated in Aswan to the Mediterranean coast requires significant grid upgrades. Furthermore, with a population projection of over 161 million by 2050, renewable energy alone will likely not be enough to sustain rapidly rising demand.

The honest assessment is that this pathway is long, but one where Egypt can leverage its natural advantages to become an exporter on its own terms.

Wired for Ambition

Egypt’s energy woes are real, but the ambition they have created runs deeper. While re-emerging as a sovereign hydrocarbon exporter will be challenging in the near-term, its infrastructure has the potential to transform Eastern Mediterranean gas dynamics.

As gas companies and European countries turn to North Africa as a new reliable hub for all things energy, Cairo refuses to be left behind.

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Last week, I appeared on Alhurra in an interview with journalist Rasha Ibrahim. Recently, China—long a reliable consumer of Gulf energy—has made a strategic shift: increasing its import of American gas and oil, as the Iran war continues to strain Gulf supply chains.

The deeper question to explore: is this just a temporary shift or long-term structural change in global energy trade dynamics? And how is it being perceived by policymakers and investors in the GCC?

I unpacked it all with Rasha: from China’s historic reliance on Iranian oil to the future of energy trade with the Gulf.

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After nearly 60 years, the UAE withdrew from OPEC, the world’s leading oil cartel, on Friday. Since then last week, widespread discussions have been sparked worldwide. As the globe grapples with its largest energy crisis in decades, the UAE’s exit from OPEC was seemingly adding more fuel to the fire of uncertainty.

At a time of confusion and debate in the energy realm, the aim of this article is to distill OPEC and what’s next with the Emirates now out.

What is OPEC?

Formed in 1960 by five countries—Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela—the Organization of the Petroleum Exporting Countries was designed to reclaim control over oil markets and prices from private companies such as BP and Shell, and return it to oil-producing governments. Other countries would later join the organization, such as the UAE in 1967.

OPEC’s market power became evident in 1973, when in the aftermath of the third Arab-Israeli war, Arab member states launched an embargo on Western nations that sent shockwaves through oil prices worldwide.

Yet since then, OPEC’s grip over the global oil market has weakened. American companies began experimenting with and introducing new production and extraction techniques in the early 2000s, such as fracking and horizontal drilling. In what became known as the “Shale Revolution,” the US climbed to become the world’s leading producer, with output now sitting at roughly 13.8 million barrels per day (bpd), a figure that barely existed 15 years ago.

The result has been a sustained challenge to OPEC’s market dominance, even with the formation of OPEC+ in 2016, a coalition of 10 non-member allies. A look at the world’s top 15 oil producers includes four non-OPEC members—the US, Canada, China, Norway—while another four are OPEC+ members, just over half the list.

Even some of those included, such as Nigeria and Libya, are still building the infrastructure and trade relations needed to become influential energy exporters. The end result has been a fall in OPEC’s share of global production from its 70% peak in the 1970s to currently roughly 30%, despite the group holding over 80% of the world’s proven reserves.

Why is the UAE leaving?

At a time when the Emirates are diversifying their economy away from oil, Abu Dhabi’s withdrawal is, at its core, an opportunity-cost calculation. With a production capacity of roughly 4.5 million bpd but a quota of just 3 to 3.2 million bpd, the country has been leaving roughly $30 billion in annual revenue on the table, a restraint not felt by non-OPEC members.

That recovered revenue could fund new diversification initiatives, fueling (pun intended) a broader shift away from fossil fuels.

The IEA estimates that OPEC+ holds roughly 5.5 million bpd in spare capacity, 90% of which sits in the Gulf. The UAE’s withdrawal has cut that supply, which as a means of support, Abu Dhabi announced a new production target of 5 million bpd by 2027.

With the UAE’s departure, OPEC’s share of global liquids supply could erode to roughly 27%, down from its current 32%.

By no means does this render the UAE a minor energy player, nor does it make OPEC irrelevant. What it does signal is a shift in the organization’s role: from price setter to price influencer.

What’s Next for OPEC?

What the 1973 crisis taught us—an event observers are revisiting as a potentially even more severe disruption unfolds—is that OPEC’s true power has always been the power of coordinated action. The UAE’s exit chips away at that, leaving a bloc whose market dominance has steadily eroded since its inception.

The numbers haven’t killed OPEC. But they have revealed that as global energy dynamics shift, so too will its role.

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KEY FACTS

• WHAT HAPPENED? The Iran energy crisis has pushed Egypt to import Libyan crude and accelerates North Africa's emergence as an alternative energy corridor

• WHY IT MATTERS? Libya, Egypt, and Algeria are developing complementary energy roles, forming a functional Mediterranean energy system

• WHAT’S NEXT? Whether this crisis-driven coordination hardens into durable integration depends on Libya's political stability and the Algeria-Morocco rivalry

For the Gulf, the closure of the Strait of Hormuz was a nightmare. For North Africa, it may be an opportunity.

As the primary export lane connecting GCC oil to global markets, the Hormuz’s closure disrupted critical energy supply chains, upending economies worldwide. But the redrawing of tanker routes has created an opening, and nowhere is that clearer than in North Africa.

The signal came from Cairo. Egypt’s state petroleum body announced it would import at least one million barrels per month of Libyan crude, a direct response to disrupted Kuwaiti supply flows cut off by the Hormuz blockade. While Egypt holds significant reserves—it’s Africa’s fourth-largest crude producer—its output has been declining, hovering around 507,000 barrels per day as of mid-2025, making it a net importer.

With Gulf oil temporarily off the table, the turn to Libya was logical. But it points to something larger: the early formation of a North African energy bloc.

Three Countries, Three Roles

Across North Africa, three countries are emerging as pillars of a wider regional energy transformation. Not through formal agreement, but through a natural and increasingly visible division of labor.

Libya is the crude supplier the region has long underused. Sitting on Africa’s largest reserves—48 billion barrels, ninth largest in the world—Libya was effectively shut out of global energy markets by a decade of civil war.

As it rebuilds, global energy giants have taken notice. TotalEnergies, ConocoPhillips, BP, and Shell have all signed exploration and redevelopment agreements with the Libyan National Oil Corporation (NOC), with combined commitments surpassing $20 billion. The NOC has set targets to raise production from 1.2 million bpd in 2025 to 1.8 million by 2027, with a long-term ambition of 2 million bpd.

Algeria, Africa’s second-largest oil producer, is the region’s gas pillar. With Europe’s energy supply disrupted by both the loss of Russian gas and now Gulf oil, Italy and Spain have turned to Algeria as a southern alternative. Via the TransMed and Medgaz pipelines, Algerian hydrocarbons are flowing into the EU at a scale that few anticipated even three years ago. Even with the Iran ceasefire, European dependence on Algeria is likely to deepen to avoid future shocks, paving the way for new long-term agreements.

Egypt, meanwhile, is not a dominant producer, but it may not need to be. It is already home to the SUMED pipeline, which carries close to 2.5 million bpd and moved 50 million tons of crude in 2025 alone.

Positioned between the Mediterranean and the Red Sea, Egypt serves as the connective tissue of the region: a transit and processing hub capable of routing oil from multiple sources to multiple markets. Ongoing economic reforms could strengthen that role further, positioning Egypt as a key exporter to northeast Africa and the Levant.

A Bloc by Function, Not by Name

The complementarity is real: one country supplies crude, one refines and routes it, one exports gas to the end market. That’s a supply chain, with or without a treaty.

But North Africa is not the GCC, and it would be premature to call it one. The energy infrastructure needed to cement the region as a leading global supplier is still developing, and given each country’s fiscal constraints, it will be built slowly. Most critically though: Geography is a strength; geopolitics remains a headwind.

Libya’s instability, persistent even after the civil war’s formal conclusion in 2020, threatens any long-term supply architecture. With the country still divided between the internationally recognized government and separatist forces, Libyan oil infrastructure is always at threat of being caught in the crosshairs.

The Algeria-Morocco rivalry is perhaps the most acute obstacle to wider Maghreb integration. Morocco, like Egypt, could serve as a key transit point for North African oil, but its dispute with Algeria over Western Sahara has already produced real consequences: In 2021, Algiers halted natural gas exports via the Maghreb-Europe pipeline running through Moroccan territory. That episode illustrates how easily the region’s energy potential buckles under political friction.

Why the World Is Watching

For European energy planners and investors, North Africa’s potential is no longer speculative. Algeria anchors southern pipeline supply; Egypt’s infrastructure offers a bypass lane for Gulf oil; Libya’s crude can reach Italian and Spanish refineries faster than almost any alternative.

This does not replace Gulf or Norwegian supply. But events unfold in the Gulf, the world will reassess its energy corridors. North Africa would do well to be ready when it does.

The region is not yet an energy bloc, but it may not need to be one to matter. What is forming is something more pragmatic: a crisis-tested Mediterranean energy system, built less by design than by necessity.

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KEY QUESTIONS

• WHAT HAPPENED? US and Israeli strikes on Iran on February 28 have sent crude prices to their highest since 2022 and shuttered the Strait of Hormuz

• WHY IT MATTERS? With Gulf energy under strain, Algeria’s direct Mediterranean pipelines, major investment plans, and growing share of EU gas imports position it as an unlikely but compelling winner of the crisis

• WHAT’S NEXT? How much Algeria can capitalize depends on how quickly it can expand capacity and how long elevated prices hold

Oil prices continue to dominate the headlines as the war in the Middle East enters its third week. The US and Israeli strikes on Iran on February 28 sent energy markets into turmoil: Crude is hovering close to $100 per barrel, the highest since 2022, while roughly 110 bcm per year of LNG transiting the Strait of Hormuz has been disrupted. The end result is shaping up to be one of the largest supply shocks in modern energy history.

Commentators are pointing to Russia as the real victor of the crisis, with the world seeing a quiet rapprochement to Russian supplies despite heavy sanctions. The US has recently announced a 30-day waiver on Russian energy products, an exemption allies like Japan are reportedly reviewing.

Yet it would be a mistake to conclude that only great powers benefit from this turmoil. At the tip of North Africa, Algeria finds itself in a rare position of leverage.

The Stability Dividend

While the Gulf comes under fire, Algeria’s pipelines run quietly under the Mediterranean. The North African region has built a reputation for stability amid political shocks elsewhere, and that geography is suddenly worth a great deal.

Algeria is Africa’s third-largest holder of oil reserves. In 2024, it exported 39.2 bcm of gas to the EU–roughly 14–15% of the bloc’s total imports–making it Europe’s fourth-largest supplier behind Norway, Russia and the US, according S&P Global. Its export routes, the TransMed pipeline to Italy and Medgaz to Spain, are direct and immediately available.

More capacity is coming. In February, Niger and Algeria formally relaunched the stalled Trans-Saharan Gas Pipeline, a $13 billion, 4,128 km project that will transport gas from Nigeria through Niger to Algeria’s Hassi R’Mel hub. With a projected capacity of 30 bcm per year, roughly 10% of Europe’s total gas demand, its timing could hardly be better.

The Europe Factor

European buyers know energy stress all too well. Before Russia’s 2022 invasion of Ukraine, Moscow supplied roughly 40% of the continent’s energy; sanctions have since strangled that supply by around 80 bcm, according to the Center on Global Energy Policy. The Gulf crisis deepens the squeeze further.

Yet a loss for one is a gain for another. Elevated prices will push Algeria’s hydrocarbon export revenues higher, having already exceeded $34 billion in the first three quarters of 2024. With Brent well above $100, OPEC+ quota constraints become less painful, meaning Algeria earns more per barrel even at capped volumes.

The crisis also accelerates what was already underway. Just days before the Gulf crisis began, the EU formally described Algeria as a “strategic and reliable” partner. Even before the conflict, Iran’s ability to supply global markets was constrained by sanctions and underinvestment; its removal from the equation tightens the market further and elevates Algiers’ standing.

Sonatrach, Algeria’s state-owned energy company, approved a five-year, $60 billion investment plan last month, with 80% directed to upstream exploration and production; approved before the crisis, the timing now looks prescient. The company also cited 17 new discoveries in 2025.

Private capital is taking notice: last July, Sonatrach and Italy’s Eni signed a 30-year, $1.35 billion deal to develop the Zemoul El Kbar block, targeting 415 million barrels of oil equivalent. Similar discussions are reportedly underway with the Netherlands according to the Algiers Brief.

The Double Edged Sword

Algeria cannot simply turn on a tap. Russia’s entrenched footprint in global energy markets makes Moscow a preferred partner for much of the world, even if Europe keeps its distance. And Algeria still imports around $50 billion in foreign goods annually, commodities that are themselves rising in price, adding inflationary pressure that offsets some of the windfall.

For now, Algeria’s greatest strategic asset may simply be where it isn’t. That geography, combined with $60 billion in planned investment, could define the country’s economic trajectory for years to come.

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KEY FACTS

• WHAT HAPPENED? Iranian strikes on Gulf energy infrastructure have compounded Europe's post-Russia supply crisis, pushing its supply chains toward Africa

• WHY IT MATTERS? Falling FLNG costs and over 100 billion barrels in reserves make Africa an increasingly viable energy partner for Europe

• WHAT’S NEXT? Africa's energy momentum is real, but active insurgencies, suspended mega-projects, and Russia's growing Sahel footprint raise serious questions about its reliability

What Happened

The unfolding conflict in the Middle East is threatening turmoil across energy markets and supply chains worldwide, particularly for Europe. The continent’s energy map was redrawn when Russia invaded Ukraine in 2022; Moscow was Europe’s leading energy provider, supplying roughly 40% of its gas. The severing of ties with the Kremlin has strangled Europe’s energy supply, with balances down roughly 9% since 2021.

Since then, Europe has leaned heavily on the Gulf; yet, as Iranian strikes increasingly target the region’s energy facilities, anxiety is mounting. QatarEnergy—the world’s leading liquefied natural gas (LNG) producer—has temporarily paused production, which alone has caused UK natural gas prices to jump 40%.

“Iran is targeting oil and energy facilities in order to put more pressure on the US and Israel,” said Bassel Doueik, an analyst with The Levant Lens.

Complicating matters is that both the Strait of Hormuz and the Red Sea now face pressure from Iran and its allies, spooking shippers from traversing these vital passageways.

“We’re on an escalatory ladder and I don’t think we’re at the end of this conflict,” Doueik warned.

As the continent’s energy supply chains come into question, executives and policymakers across Europe are turning southward toward Africa. Can the continent once dominated by Europe be its new energy lifeline?

Why It Matters

Africa’s energy potential has long drawn outside interest. Six of the top thirty countries with the highest oil reserves are in Africa—Libya, Nigeria, Algeria, Sudan, and Egypt—totaling over 100 billion barrels, with three sitting along the Mediterranean for swift European access.

Africa has also become a proving ground for floating liquefied natural gas (FLNG). Eni began exporting gas to Europe last month via its FLNG vessel, Nguya, from the Republic of the Congo, and operates the Coral South plant in Mozambique. According to the Financial Times, Eni chief executive Claudio Descalzi estimates capital costs for FLNG have fallen by up to 40% to below $1 billion per million tons of annual capacity.

Several other FLNG projects are advancing across the continent, including BP’s Greater Tortue Ahmeyim Phase 1 in Senegal and Perenco’s Cap Lopez in Gabon.

“The longer the Middle East conflict goes on, the sharper Europe will be pushed into US dependency,” said Shraddha Bhandari, founder of Confluence Consultants. “Africa has several competitive advantages: geographic proximity, flexible contract structures, pipeline and LNG optionality.”

Individual European states are also moving. Germany, which saw a 22% post-invasion drop in energy balances, is among the most aggressive.

“Germany is rapidly building LNG terminals such as Wilhelmshaven and Brunsbüttel and diversifying supply,” said Bhandari. “Potentially becoming the largest marginal buyer of African LNG in the 2030s.”

What’s Next

Africa’s promise masks serious concerns. Countries home to active FLNG projects, like Democratic Republic of Congo and Nigeria, battle insurgents willing to strike energy infrastructure. A $20 billion TotalEnergies project in Mozambique was suspended after a 2021 insurgent attack. Russia’s Africa Corps paramilitary group, embedded with military governments across the Sahel, compounds the picture.

“Security, stability, governance, and conflict create a complex risk scenario, so no easy choice for European buyers,” said Bhandari.

Africa’s emergence as an FLNG hub is real and accelerating. But whether Europe can bank on it as a long-term anchor—rather than a volatile supplement—remains the defining energy question for both continents.

“The future outcome could be a new energy geography,” said Bhandari. “Atlantic LNG flowing into Northern Europe, and African LNG anchoring Southern and Mediterranean markets, reinforcing Africa’s role as Europe’s near-shore energy partner.”

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