Record Coal Demand Looms as LNG Prices Soar Amid Strait of Hormuz Blockage

The International Energy Agency (IEA) has reported that global coal demand is set to hit a record high this year, driven by soaring liquefied natural gas (LNG) prices due to the Strait of Hormuz blockage.

According to the IEA's Coal Mid-Year Update 2026, LNG shipments out of the Strait have slumped significantly, pushing up prices and prompting utilities to run coal-fired units harder. As a result, global coal demand is now projected to rise by 1.2% in 2026, reaching a record 8.94 billion tons.

The change in coal demand forecasts this year mainly reflects the crisis in the Middle East and an unusually strong El Niño weather pattern, the IEA said. Coal demand in China and India, the two biggest coal consumers, is expected to rise, with Chinese demand set for a 1% increase to 5 billion tons and Indian demand rising by 4.2% to 1.353 billion tons.

The Strait of Hormuz blockage has had a significant impact on LNG shipments, but it does not directly affect coal markets. However, the tighter natural gas supply has pushed up prices, prompting some electricity systems to switch from gas to coal. If the Strait remains closed well into next year, global coal demand could further rise to new record highs.