The Middle East conflict could accelerate the nuclear comeback

In an article published in L’Agefi, Daniel Varela, Chief Investment Officer at Piguet Galland, analyses the dynamics that could bring nuclear power back to the forefront of the global energy mix. 

In a persistently tense geopolitical environment, energy security has become a major strategic priority. Recent developments in the Middle East have accelerated the reconfiguration of supply chains and highlighted the vulnerability of fossil fuels. As a result, many countries are seeking to reduce their external dependence and strengthen their autonomy in electricity generation.

While renewable energy continues to benefit from renewed interest supported by ambitious public policies, its intermittency limits its ability to meet demand on its own. It requires complementary solutions capable of ensuring stable and continuous large-scale production. In this context, nuclear power is emerging as a credible pillar of the energy transition, combining security of supply, low carbon intensity and controllable production.

Strong momentum in Asia

This shift is reflected in a gradual revival of nuclear programmes. Around 60 reactors are currently under construction worldwide, and the global fleet could reach nearly 600 units by 2040, compared with around 440 today. This momentum is particularly strong in Asia, notably in China and India, where rising electricity demand is driving structural decisions.

Beyond energy policies, several underlying trends are reinforcing electricity demand. The rapid growth of artificial intelligence is accompanied by the large-scale deployment of data centres, which are highly energy-intensive and require a reliable, continuous power supply. At the same time, the electrification of the economy is accelerating, particularly in transport, with the development of electric vehicles and related infrastructure. These structural shifts are supporting sustained growth in demand for dispatchable electricity.

Uranium, a critical resource

In this context, the outlook for uranium appears attractive. Global production stands at around 60,000 tonnes per year, nearly 95% of which is used for electricity generation. After increasing by around 40% between 2008 and 2016, supply has stagnated, held back by the aftermath of the Fukushima nuclear accident (March 2011) and prolonged underinvestment in mining capacity.

Production also remains highly concentrated, with Kazakhstan accounting for around 42% of global supply, followed by Canada (13%) and Australia (9%), reinforcing the strategic importance of this resource. With demand expected to grow significantly, the market could tighten.

The Nuclear Energy Agency (NEA) expects demand to rise by around 70% by 2040, reaching nearly 108,000 tonnes.

A structural imbalance

This structural imbalance between constrained supply and expanding demand is likely to require higher prices to encourage the development of new production capacity and restore market balance.

Within an investment portfolio, exposure to uranium provides access to a long-term theme at the crossroads of energy, climate and technological challenges, while offering valuable diversification. Given the specific characteristics of this market, the most efficient way to gain exposure remains through exchange-traded funds (ETFs) invested directly in physical uranium, allowing for a close reflection of the commodity’s price movements.

Link to the Agefi article (french only)