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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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