• Labour and the left projected to win majority of seats
• Jonas Gahr Stoere expected to remain PM if projection holds
• Labour to face tough choices on oil investments, wealth fund

OSLO, Sept 8 (Reuters) - Norway's minority Labour Party government held a narrow election lead on Monday, projections by local broadcasters showed, in a national ballot dominated by concerns over rising living costs and wars in Ukraine and Gaza.

Projections by broadcasters NRK and TV2 after polls had closed showed the left-wing bloc of Prime Minister Jonas Gahr Stoere's Labour and four smaller parties winning 89 seats, above the 85 needed for a majority.

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If official results confirm the early readings, Stoere, 65, would remain in power in a minority government that would be heavily reliant on smaller parties to pass major legislation such as fiscal budgets.

To get their backing, he would likely face tough discussions over issues such as tax hikes for the wealthy, future oil exploration, and divestments by Norway's $2 trillion sovereign wealth fund from Israeli companies.

"It looks like Stoere will continue as prime minister," Jonas Stein, an associate professor in political science at the University of Tromsoe, told Reuters.

"But with a much more difficult parliamentary situation, in which he is dependent on five parties to govern. The Progress Party is having a great election. But not enough to win power," he said.

Right-wing parties headed by the anti-immigration populist Progress and the Conservatives of former Prime Minister Erna Solberg, 64, were on track for 80 seats, the projections showed.

Voter concerns over the conflict in Ukraine and an aggressive Russia, which shares a border with Norway in the Arctic, have given a boost to the left in recent months after former NATO Secretary-General Jens Stoltenberg, 66, joined Stoere's cabinet.

Many Norwegians saw the decision as a safeguard in case of a new armed conflict, given Stoltenberg's decade-long tenure as head of the western military alliance.

Some 59% of Norwegians believe a new war in Europe is likely within the next decade, up from 55% last year, according to a survey by the Peace Research Institute Oslo.

TAXES, ISRAEL, OIL

Within the right-wing bloc, early projections indicated a shift further to the right, with the Progress Party of Sylvi Listhaug, 47, making its best-ever showing in an election.

The party was projected to win at least 43 seats, more than double its current total and making it the country's second-largest party.

Listhaug, a onetime firebrand who cites Ronald Reagan and Margaret Thatcher as her role models, campaigned on what she said was wasteful public spending on areas such as international aid and subsidies to green energy.

Her party's promise of large tax cuts appeared to have resonated with many voters.

Still, none of the right-wing parties that are expected to win seats have sought the backing of U.S. President Donald Trump or his movement, unlike some of their counterparts elsewhere in Europe.

Also looming large in the final weeks of the election was the war in Gaza, with Stoere's smaller allies calling for Norway's $2 trillion sovereign fund, the world's largest and a major source of the country's wealth, to divest further from Israeli companies.

Since June 30, the fund has divested from more than two dozen Israeli companies, following media reports that it had built a stake in a jet engine company that provides maintenance for Israeli fighter jets.

Some parties on the left have questioned whether the country is in effect contributing to violations of international law by investing in companies active in the occupied Palestinian territories.

Also at stake in the election is the future path of the oil industry in Norway, which replaced Gazprom as Europe's top gas supplier after Russia's 2022 invasion of Ukraine.

Norway's role is set to grow further as the European Union plans to phase out the use of Russian gas by 2027, but some of Stoere's junior allies want to gradually phase out oil exploration, which could limit new gas fields.

https://www.reuters.com/world/europe/norways-ruling-labour-holds-narrow-election-lead-2025-09-08/