Middle East Conflict Drives Oil Prices Higher Amid Coal Demand Surge
The ongoing conflict in the Middle East has led to a significant increase in oil prices. Saudi Arabia's oil production has plummeted to its lowest level since 1990, causing Brent crude to surge to $104.8 per barrel, a 3.5% jump. The US WTI price is also nearing $100 per barrel.
The International Energy Agency (IEA) has reported that the blockade of the Strait of Hormuz is driving up global demand for coal. As a result, countries with both gas-fired power stations and coal-fired generation capacity are increasing electricity generation using coal, leading to higher coal consumption in markets such as Europe, Japan, South Korea, and China.
The IEA estimates that global demand for coal will grow by 1.2% in 2026, bringing global consumption to a record 8.94 billion tonnes. However, whether this trend continues into 2027 depends on the continued blockade of the Strait of Hormuz.