Published by Global Banking & Finance Review®
Posted on December 1, 2025
3 min readLast updated: January 20, 2026
Add as preferred source on GoogleNorway's government faces a budget crisis due to disagreements over oil drilling and wealth fund's Israel investments, risking its stability.
By Terje Solsvik and Gwladys Fouche
OSLO, Dec 1 (Reuters) - Norway's Labour government failed to win backing for its 2026 draft budget by an end-November deadline but talks will resume in parliament to find a compromise over oil drilling and the wealth fund's Israeli investments, a negotiator said on Monday.
The Norwegian parliament is due to vote on the budget on Friday, and Prime Minister Jonas Gahr Stoere could be forced to call a vote of confidence if no agreement is reached by then, putting his minority government on the line.
The Labour Party narrowly won a second term in a September election, but the result left it reliant on four small left-wing parties to pass the budget, with only two of those, the agrarian Centre Party and the far-left Red Party, agreeing so far.
"It is surprising this is happening so soon after the election," Jonas Stein, a political scientist at UiT the Arctic University of Norway, told Reuters.
"The Greens in particular had promised during the election that they would back Stoere as prime minister and now he could fall two-to-three months after the election."
The climate-focused Green Party, which wants a gradual phaseout of the oil industry by 2040, walked out, as did the Socialist Left over its objections to investments by Norway's sovereign wealth fund in Israel.
"We must continue our work to secure a majority for this budget by Friday," parliament's finance committee Chair Tuva Moflag of Labour told public broadcaster NRK on Monday.
Stoere has said that Norway, Europe's biggest supplier of gas and a major oil producer, should continue to explore for hydrocarbons to sustain the country's biggest industry.
The government also objects to demands that Norway's $2 trillion sovereign wealth fund should divest from all Israeli firms, arguing that only companies involved in the occupation of Palestinian territories should be excluded.
"Norwegian politics have become a bit more adversarial and a bit more polarised," Johannes Bergh, a political scientist at the Oslo-based Institute for Social Research, told Reuters.
"It might be more comparable to what's happening in countries like Belgium or the Netherlands, where the political landscape is very fragmented. It has become very fragmented here as well."
Parliament is elected for a fixed four-year term, with the next vote due in 2029, making it difficult for parties on the right to challenge Stoere's government. It is not possible to call early elections or dissolve parliament.
(Reporting by Terje Solsvik and Gwladys Fouche; Editing by Sharon Singleton)
A sovereign wealth fund is a state-owned investment fund that invests in various assets to generate revenue for a country, often funded by surplus revenues from natural resources.
Oil drilling is crucial for Norway's economy as it is a major source of revenue, contributing significantly to the country's wealth and funding for public services.
Investment portfolios are collections of financial assets, such as stocks, bonds, and other securities, managed to achieve specific investment goals.
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