The Middle East is a major producer of hydrogen-based products, and the conflict has strongly impacted their production. The Middle East is home to around one-sixth of global hydrogen production, the majority dedicated to the production of chemicals, fertilisers and refined oil products. The region accounts for more than 10% of global refining capacity, ammonia and urea production, and close to 17% of methanol production. Several refineries and petrochemical plants have halted operations due to supply disruptions and the impossibility of exporting their products or to military attacks, which in some cases have damaged hydrogen production units. Restarting operations and reaching pre-conflict activity levels will take weeks and even months in the case of damaged facilities.

The consequences of the conflict reach far beyond the Middle East as the region is a major player in global trade for hydrogen-based products. Much of the production output of the region is exported. The region makes up over one-quarter of global trade in ammonia, almost 40% of urea trade and almost 45% of methanol trade, and one-third of its refining capacity is export-oriented. The closure of the Strait of Hormuz has severely disrupted the supply of all these products. Port infrastructure outside the Persian Gulf has also been hit by attacks, further limiting export capabilities. The production of hydrogen-based fuels outside the Middle East has been affected, particularly in Asia, where countries are very dependent on natural gas imports from the Middle East – one-quarter of ammonia production in Bangladesh, India and Pakistan uses natural gas imported from the region. As a consequence of these disruptions, global markets for fertilisers, refined products and chemical products are suffering shortages and price volatility.

Global fertiliser markets have been particularly affected, with potential implications for the food supply chain. The closure of the Strait of Hormuz has constrained trade flows for ammonia, urea and sulphur, all of which are essential for fertiliser production. In addition, production outages due to shortages in gas supply and high gas prices in several countries (including Bangladesh, India and Slovakia) have further tightened supply. As a result, fertiliser production costs have increased worldwide, as urea prices doubled between January and May 2026. These pressures have been compounded by rising natural gas prices and export restrictions imposed by major suppliers. Even modest reductions in fertiliser use can lead to declines in crop yields, posing risks to the food supply chain. The risk is particularly acute in import-dependent agricultural economies, such as Morocco, which meets all its demand for ammonia with imports, 40% of which come from the Middle East, or Brazil, Australia, South Africa and Thailand, which meet all their demand for urea with imports (40-85% from the Middle East).

Governments are considering strategies to mitigate the impacts of the ongoing energy crisis and potential future crises, and hydrogen can support in increasing diversification. Diversification is a key element of energy security, and the way hydrogen and hydrogen-based fuels are produced, as well as their use, can play an important role. For example, countries can increase and diversify the use of domestic energy resources by using electrolysis rather than gas or coal for producing hydrogen-based products such as fertilisers and methanol, and shipping and aviation fuels. Governments can support the development of new supply chains for low-emissions hydrogen and hydrogen-based products, diversifying fuel supply and enlarging the pool of suppliers compared to oil and gas supply.

Hydrogen and hydrogen-based fuels can play a role supporting energy security in the long-term, but they are not ready at scale to alleviate immediate pressures. Uptake of low-emissions hydrogen and hydrogen-based fuels will not happen overnight, and the existing and committed level of production is not sufficient to provide an immediate response to the current moment in energy markets. Several large projects will come online before 2030, but it will take time to build the scale needed to make a significant contribution. In addition, this will require the development of common infrastructure to store, transport and distribute hydrogen and hydrogen-based fuels to different end-users.

Policy support will remain necessary to close the cost gap with incumbents and enable short-term uptake. In the near term, low-emissions hydrogen production will remain more costly than fossil-based hydrogen in most parts of the world, apart from China, where renewable hydrogen could become cost-competitive by 2030. In the rest of the world, the short-term adoption of low-emissions hydrogen and hydrogen-based fuels will entail a cost premium. Higher fossil fuel prices can significantly reduce the cost gap, as can falling costs of low-emissions hydrogen production. But it would require extended periods of higher fossil fuel prices to make a difference in de-risking projects and triggering sustained investment decisions.

Global hydrogen demand surpassed 100 million tonnes (Mt) in 2025, driven by growth in traditional sectors. Hydrogen use in industry and refining accounted for almost all demand in 2025. Hydrogen demand in new applications is increasing and is expected to grow faster in the near term, but it still represents a very minor share of global demand. However, slow and uncertain policy implementation is failing to address the main barriers – particularly high costs, uncertain demand, unclear or complex regulations and lack of infrastructure – and preventing faster uptake.

Low-emissions hydrogen production grew by 20% in 2025 to reach almost 1 Mt, but progress is concentrated in a small number of projects. Low-emissions hydrogen production is expected to see another record year in 2026 and reach more than 1% of global production for the first time. This is thanks to some initial policies to support production, mostly in China and Europe, and to develop international supply chains in Japan. These policies have helped to unlock final investment decisions (FIDs) in a small number of projects, but are insufficient to create scale, reduce costs and ensure sustainable growth.

As well as near-term action to address barriers, long-term objectives need to be renewed to provide clarity and facilitate stable growth. The low-emissions hydrogen sector has achieved impressive success since 2020, and growth is expected to accelerate in the second half of this decade. Efficient policy implementation and regulation is needed to stimulate demand and to develop workable frameworks for targeted support as well as enabling infrastructure. This can further accelerate uptake in the near term, but it will be insufficient to meet announced ambitions by 2030. Governments should update hydrogen strategies and long-term deployment targets to reflect changing market realities, building on lessons from the first wave of policy initiatives in the early 2020s, and responding to new opportunities arising from heightened energy security concerns.

The pipeline of announced projects for low-emissions hydrogen production has shrunk to 27 Mt by 2030, mostly due to delays post 2030 and cancellations. Since the assessment presented in the Global Hydrogen Review 2025 (GHR-25), some 300 ktpa of additional production has reached FID, but investment momentum slowed in 2025. Committed projects and those with strong potential to be in operation by 2030 declined from 10 Mt to just above 6 Mt compared to the GHR-25, due to delays in investment decisions. Around 80% of the production with strong potential targets the production of chemicals, use in refining, and production of low-emissions based fuels, which are applications where hydrogen-based fuels could more promptly support diversification goals. There is currently 22 Mt of potential production in announced projects that may lose any chance to begin operation by 2030 if investment decisions are not taken by early 2027. Two-thirds of this potential production is in Europe, North America and Latin America.

China shows signs of deceleration in electrolysis deployment, but the short-term outlook is positive due to recent policy developments. Global installed electrolysis capacity doubled in 2025 to exceed 4 GW, with China behind nearly three-quarters of new installations. Low technology cost and experience with large projects have facilitated faster growth in the country. However, unsustainable internal competition driven by surplus capacity is leading to market consolidation. New FIDs in production projects also fell for the first time in 2025. Electrolyser manufacturers are starting to expand their overseas markets to ensure business continuity. However, since the second half of 2025, the government has announced new support schemes to expand use of hydrogen and hydrogen-based fuels to new sectors and reduce reliance on fossil fuel imports. This is expected to reinvigorate investment activity in the coming years.

In Europe, the first large-scale projects are expected to come online in 2026, but slow policy implementation is delaying scale-up. Low-emissions hydrogen is slowly growing in Europe thanks to some national and EU-wide support programmes and regulations. Transposition of the EU Renewable Energy Directive targets for the use of renewable fuels of non-biological origin (RFNBO) in transport into national legislation has pushed forward projects, particularly for use in refining. However, this has been a slow process, and the implementation of other key regulations remains unclear, slowing investment and scale-up.

Other markets are experiencing some initial progress thanks to early policy support, but the outlook remains uncertain due to lack of regulatory clarity. In North America, some large projects based on carbon capture, utilisation and storage have reached FID. However, most projects under development in the region are export-oriented, and their bankability relies on the creation of markets for low-emissions hydrogen-based products overseas. Today this is only occurring through policy instruments in Japan and the European Union, but recent developments have increased uncertainty for project developers. In India, the tenders of the Solar Energy Corporation India and several refineries have led to offtake contracts, but whether all the deals will move forward will depend on the availability of government incentives, which is still unclear.

Offtake agreements remain insufficient to unlock large-scale investment in low-emissions hydrogen production. New offtake agreements were broadly unchanged in 2025, at around 1.7 Mt. Only around 20% of newly signed volumes were backed by firm contractual commitments, concentrated in refining, industry and power generation. This highlights the persistent challenge of demand creation, which has been widely reported by project developers as a key barrier to investment. For the first time, trade-oriented agreements overtook domestic-use agreements in 2025, thanks to policies in Japan and Europe.

The refining and chemicals sectors lead adoption of low-emissions hydrogen, as demand creation policies gather momentum. Based on committed projects, 2.5 Mt of low-emissions hydrogen (60% of global committed production) is expected to be consumed in refineries and industrial facilities by 2030. Demand creation measures targeting refining (in Europe) and industry (mostly in China) are emerging, although their implementation has often been slow. Additional initiatives in public procurement for low-emissions hydrogen-based fuels and products, demand aggregation mechanisms and targeted support programmes, particularly in existing industrial applications, could help strengthen market formation, but they will need to be enacted rapidly and efficiently to make an impact by 2030.

Development of low-emissions hydrogen production projects in Africa will require a clear focus on how they can contribute to wider development goals. Nearly 600 million people in Africa lack access to electricity, energy demand and GDP per capita are far lower than in advanced economies, and the electricity grid remains largely underdeveloped. Hydrogen development risks competing with these policy priorities but – if well designed – could instead support them by catalysing investment, mobilising finance, developing infrastructure and contributing to industrial development. Strategies and roadmaps for hydrogen will need to be linked with overall electricity sector planning. For example, government support or concessional financing for renewable hydrogen projects could be tied to conditions to improve access to electricity and water in a region.

Low-emissions hydrogen can support industrial development, food security and trade. Africa’s fertiliser use remains below the global average, and many countries depend on imports, 35% of which come from the Middle East. Expanding competitive domestic low-emissions ammonia production could improve access to nitrogen fertilisers and reduce exposure to price volatility, while supporting food production. Hydrogen could help African countries move up the value chain in steel production, reducing dependence on imports and boosting industrial activity. Over 80% of Africa’s ironmaking capacity is based on direct reduced iron, providing a basis for blending hydrogen with natural gas in existing and new plants.

Hydrogen demand and production in Africa remains small but has long-term potential. Hydrogen demand reached 3.1 Mt in 2024, equal to around 3% of global demand and concentrated in a handful of countries, led by Egypt, Algeria and Nigeria. Ammonia production represents nearly three-quarters of hydrogen use, with supply overwhelmingly based on natural gas. Africa has vast renewable energy resources that could support competitive low-emissions hydrogen production, yet deployment remains at an early stage, with high financing costs being the main barrier. Around 6 kt of low-emissions hydrogen is produced today, and only 1 of the 31 projects announced for 2030 has reached FID.

Targeted policies and investment are needed to unlock deployment. Near-term progress will depend on reducing financing costs for project development, using instruments like blended finance mechanisms, credit guarantees, insurance instruments and support for offtake agreements. Governments need to balance domestic hydrogen use with export opportunities while accelerating renewable energy deployment, which can create positive spillovers for the broader energy system. Developing infrastructure plans, certification schemes and industrial hubs around existing demand centres and strategic ports can help lay the foundations for long-term growth.