Middle East Conflict Drives Global Coal Demand Higher

Global coal demand is on the rise due to energy market disruptions caused by the conflict in the Middle East, according to the International Energy Agency's (IEA) latest update. The agency's Coal Mid-Year Update 2026 report notes that sharp rises in natural gas prices have prompted countries to turn to alternative sources, driving up electricity generation from coal.

The conflict has disrupted liquefied natural gas (LNG) shipments through the Strait of Hormuz, leading to higher natural gas prices and increased demand for coal. This has contributed to higher coal use in Europe, Japan, Korea, China, and other markets than previously expected.

China's coal consumption has also increased due to high oil prices and a strong El Niño weather pattern, which is set to support coal demand in some major consuming countries in Asia. As a result, global coal demand - which had been set to decline slightly year-over-year - is now forecast to rise by 1.2% in 2026, bringing the world's consumption to a record 8.94 billion tonnes.

The IEA report notes that the picture could shift again in 2027, depending on whether shipping traffic through the Strait of Hormuz recovers and natural gas prices decline back towards pre-war levels. If LNG flows through the Strait rebound, global coal demand could decrease in 2027; if it remains closed to LNG shipments, coal demand could increase further.