Coal Prices Surge Amid Middle East Conflict and Rising Oil Costs

Coal prices have been hovering near three-month highs in mid-September, holding steady above $145 per ton. The IEA attributed this to disruptions from the Middle East conflict, which has pushed oil and natural gas prices higher. This shift is encouraging a move toward coal-fired power generation.

The International Energy Agency (IEA) now forecasts global coal demand to increase by 1.2% to a record 8.94 billion tons this year, reversing its previous projection for a slight decline. Although the Middle East is not a major coal producer and few coal shipments pass through the Strait of Hormuz, economies in Europe and Asia have turned increasingly to coal for power generation amid a sharp drop in LNG (Liquefied Natural Gas) shipments.

Higher oil prices have also prompted China to increase coal consumption for chemical production. The IEA added that global coal output is expected to decline in 2026 due largely to developments in China, where safety inspections following a major mine accident in May have significantly reduced production.