IEA: Global Coal Demand Set to Hit Record High as Iran War Chokes LNG Supply
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The International Energy Agency projects global coal demand will reach a record 8.94 billion tons in 2026, driven by surging LNG prices caused by shipping disruptions in the Strait of Hormuz amid the Iran conflict. Major economies including China, India, Japan, South Korea, and Europe are increasingly shifting to coal-fired power generation as natural gas supplies tighten.
Soaring LNG prices due to the Strait of Hormuz blockage are prompting economies to shift to alternative energy sources, pushing coal demand to a another record high this year, the International Energy Agency (IEA) said in a new report on Thursday.
The surge in LNG prices have pushed markets including China, India, Japan, South Korea, and even Europe, to rely more on coal-fired capacity for electricity generation, the IEA said in its new Coal Mid-Year Update 2026.
The Middle East is not a major exporter of coal, so global coal shipments weren’t disrupted when the Iran war began more than six months ago. But the LNG shipments out of the Strait of Hormuz slumped materially, pushing LNG and gas prices higher and prompting utilities to run coal-fired units harder.
As a result of the major energy supply dislocation, global coal demand – which before the war was expected to slightly drop this year – is now projected to rise by 1.2% in 2026, the IEA said. This increase would bring global coal consumption to a record 8.94 billion tons this year.
The change in coal demand forecasts for this year “mainly reflects the crisis in the Middle East and an unusually strong El Niño weather pattern,” the IEA said.
“Although shipping disruptions in the Strait of Hormuz do not directly affect coal markets, tighter natural gas supply has pushed up prices, prompting some electricity systems to switch from gas to coal.”
Coal demand in the two biggest coal consumers, China and India, is expected to rise this year. Chinese demand is set for a 1% increase to 5 billion tons, while India will see a 4.2% rise to 1.353 billion tons, reversing last year’s temporary slight drop, according to the IEA.
If the Strait of Hormuz remains largely closed to LNG shipments well into next year, global coal demand could further rise to new record highs, the agency added.
By Michael Kern for Oilprice.com
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The surge in LNG prices have pushed markets including China, India, Japan, South Korea, and even Europe, to rely more on coal-fired capacity for electricity generation, the IEA said in its new Coal Mid-Year Update 2026.
The Middle East is not a major exporter of coal, so global coal shipments weren’t disrupted when the Iran war began more than six months ago. But the LNG shipments out of the Strait of Hormuz slumped materially, pushing LNG and gas prices higher and prompting utilities to run coal-fired units harder.
As a result of the major energy supply dislocation, global coal demand – which before the war was expected to slightly drop this year – is now projected to rise by 1.2% in 2026, the IEA said. This increase would bring global coal consumption to a record 8.94 billion tons this year.
The change in coal demand forecasts for this year “mainly reflects the crisis in the Middle East and an unusually strong El Niño weather pattern,” the IEA said.
“Although shipping disruptions in the Strait of Hormuz do not directly affect coal markets, tighter natural gas supply has pushed up prices, prompting some electricity systems to switch from gas to coal.”
Coal demand in the two biggest coal consumers, China and India, is expected to rise this year. Chinese demand is set for a 1% increase to 5 billion tons, while India will see a 4.2% rise to 1.353 billion tons, reversing last year’s temporary slight drop, according to the IEA.
If the Strait of Hormuz remains largely closed to LNG shipments well into next year, global coal demand could further rise to new record highs, the agency added.
By Michael Kern for Oilprice.com
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