Algeria, Libya Eye Energy Gains From Iran Conflict

Algeria and Libya are moving to expand oil and gas output as the Iran conflict disrupts global energy flows, presenting both nations with an opportunity to increase exports—particularly natural gas to Europe—but only if they act quickly and with precision, according to analysts and international officials cited on April 22, 2026.

The US-Israeli war against Iran has damaged energy infrastructure across the Gulf and effectively halted tanker traffic through the Strait of Hormuz, which normally channels a fifth of global oil and liquified natural gas, forcing widespread production shutdowns. Against this backdrop, countries globally are reassessing their energy security strategies, said Laury Haytayan, director for the Middle East and North Africa at the Natural Resource Governance Institute.

Current Production and Constraints

Algeria was the world’s ninth-largest natural gas producer in 2023 and the 14th largest for crude oil, according to the International Energy Agency. Libya ranked 17th among oil producers and 50th for natural gas output.

Both nations possess vast untapped potential, but face distinct challenges. Algeria’s exports are constrained by rising domestic gas demand, existing facilities running at full capacity, and declining productivity in older fields. Libya, divided between Tripoli’s internationally recognized government and a rival administration in the east following 15 years of civil war, faces governance and security obstacles that limit foreign investment appeal.

Recent Policy Actions

Algeria offered seven oil and gas blocks earlier in the week in a new licensing round scheduled to conclude by January 2027. Libya’s National Oil Corporation began trialling the first phase of a gas pipeline the previous week, designed to eventually span 130 kilometers from the Farigh field to Mediterranean facilities.

Before the Iran conflict began, Libya also awarded new oil and gas blocks to foreign majors including Chevron, Eni, and QatarEnergy in its first licensing round in 20 years.

International Assessment and Growth Projections

Roberto Cardarelli, an International Monetary Fund official, identified Algeria and Libya as “winners” from the Iran conflict at IMF spring meetings in Washington the previous week. “They have the windfall from the energy crisis,” he said. “They’re going to have more demand for their production to satisfy the needs from Europe in particular.”

The IMF revised growth projections upward by 2.5 percentage points for Libya and nearly 1 percentage point for Algeria, though it characterized the increases as “highly uncertain.”

Algeria’s gas exports have been rising as Italy and Spain seek additional deliveries via the TransMed and Medgaz pipelines, respectively, to offset suspended Qatari LNG supplies, according to Anne-Sophie Corbeau, from the Center on Global Energy Policy in Paris.

Timeline Challenges

Corbeau noted that Libya’s piped gas exports have been low and declining, and are unlikely to recover until Eni’s $8 billion offshore development comes online in late 2027. “The short answer is that they won’t be able to benefit from it right now, but later,” she told AGBI.

For Algeria and Libya’s expansion bids to succeed, timing and precision will be critical, according to Haytayan. Investments that increase production and exports in a rapid and well-calibrated manner can strengthen their market share. However, delay or overexpansion carries risks: European gas demand may decline as the EU and UK intensify renewable energy investments to avoid a second energy crisis in four years, or cheaper Gulf supplies could return online as the Strait of Hormuz reopens or alternative routes emerge.

“Then it might be a risky investment,” Haytayan said.

FAQ

Q: What production rankings do Algeria and Libya currently hold globally?

A: According to the International Energy Agency, Algeria ranked as the world’s ninth-largest natural gas producer and 14th largest for crude oil in 2023. Libya ranked 17th among oil producers and 50th for natural gas output.

Q: When could Libya’s gas exports increase significantly?

A: Anne-Sophie Corbeau from the Center on Global Energy Policy stated that Libya’s piped gas exports are unlikely to improve substantially until Eni’s $8 billion offshore development comes online in late 2027.

Q: What have the IMF’s growth projections been for these nations?

A: The IMF revised growth projections upward by 2.5 percentage points for Libya and nearly 1 percentage point for Algeria, though these were characterized as “highly uncertain.”