The conflict in the Middle East has disrupted not only oil and gas flows, but also global supply chains for hydrogen‑based products, particularly fertilisers and chemicals such as ammonia, urea and methanol. These products account for a large share of hydrogen demand, with ammonia and methanol alone representing roughly half of global consumption.

The Middle East plays a critical role in global markets for hydrogen-based products, and a large share of its production is dedicated to exports, making the region a major player in global trade of these products. Disruptions to the Strait of Hormuz – which most exports from the region pass through – have constrained supply and driven up prices. Urea prices doubled between January and April 2026, and methanol prices also increased substantially.

Production has been curtailed both inside and outside the region due to supply shortages and higher gas prices, with several fertiliser plants suspending production or reducing their operations. These disruptions risk affecting agricultural output, as reduced fertiliser use can significantly lower crop yields, potentially affecting the food supply chain.

Governments have responded with measures such as export restrictions, subsidies and efforts to secure alternative supplies. While renewable hydrogen offers a long-term pathway to reduce reliance on volatile fossil-based supply chains, it cannot provide an immediate solution, underscoring the structural vulnerability of current fertiliser markets.

Energy security today goes beyond adequate supply at affordable prices to encompass resilience, diversification and flexibility. Hydrogen can support these objectives in several ways. By enabling the use of domestic resources, renewable hydrogen can reduce reliance on fossil fuel imports, thereby reducing exposure to supply disruptions. Renewable hydrogen can also enhance price stability when linked to long-term contracts, and help to diversify energy sources and trading partners. Hydrogen can also improve the resilience of the system by providing additional assets that could be used to satisfy energy demand during supply disruptions.

Hydrogen can be used in multiple applications, which allows governments to adapt its use to their national contexts. In addition, the multiple conversion steps in the hydrogen supply chain mean there is additional flexibility in the degree of domestic production for each of these steps. Nevertheless, the use of hydrogen to enhance energy security also introduces a trade-off with cost, since low-emissions hydrogen is more expensive than production from unabated fossil fuels in most regions.

The contribution of hydrogen to energy security will take time to materialise. A single project can take several years to execute, and wider system impacts depend on scaling infrastructure and cumulative deployment across multiple projects. Historical experience with liquefied natural gas suggests that reaching a meaningful share of energy supply can take decades. Unlocking this long-term opportunity will require sustained policy support, long-term investment and alignment with broader energy system priorities.

Governments have set ambitious goals to scale up low‑emissions hydrogen this decade, supported by strategies and funding schemes introduced since the early 2020s. These efforts have driven early growth: global production rose to around 1 Mt in 2025, up from less than 0.6 Mt in 2020. However, deployment is falling short of expectations. Policy delays, limited incentives on the demand side and persistent cost gaps with fossil-based alternatives have slowed progress, raising doubts about achieving 2030 targets.

While announced production targets reach almost 27 Mt per year by 2030, projects that have already secured investment decisions suggest a much lower outcome – just over 4 Mt, with a further 2 Mt possible if enabling conditions improve. Only China and the Netherlands are on track to meet their objectives. Reaching global targets would require unprecedented growth rates, far exceeding those seen in other clean energy technologies.

Accelerating progress will depend on decisions taken in the next few years, given typical project lead times. Stronger demand‑side policies, improved funding mechanisms, faster permitting and better infrastructure will all be critical to unlocking investment. However, despite momentum, the gap between ambition and reality suggests that many 2030 targets will remain out of reach without rapid policy action and a recalibration of expectations.

Interest in geological hydrogen is rising rapidly, supported by growing private investment and an expanding pipeline of exploration projects. Geological hydrogen includes naturally occurring accumulations and stimulated methods that enhance or induce hydrogen generation through anthropogenic actions. Natural occurrences have been documented for decades, and wells in Mali and Albania have demonstrated that hydrogen can accumulate and flow under certain geological conditions, but the resource potential of such wells has not yet been validated. The sector is therefore moving beyond confirming that natural hydrogen exists towards assessing where viable accumulations may form, how to identify them before drilling, and whether reservoirs can sustain commercial flow rates.

Natural hydrogen exploration stocks have delivered threefold returns in recent years, far outpacing broader hydrogen-related portfolios. Venture capital (VC) in geological hydrogen start-ups is also rising, despite an overall decline in hydrogen VC, and now accounts for around 15% of all VC for hydrogen production technologies. Most projects nonetheless remain in early surface and subsurface exploration, spanning almost 30 countries, with only one operating well in Mali.

Market activity therefore reflects expectations rather than demonstrated resource potential. Significant challenges remain, including upstream and downstream regulatory uncertainty, exploration risk and technology validation. Initial production could emerge in the 2030s, but large-scale deployment is unlikely before the 2040s. The near-term role of geological hydrogen is therefore likely to remain limited, but its potential warrants continued assessment.