Middle East War Pushes Global Coal Demand Higher Amid Calls for Lower Carbon Emissions
Global coal demand is expected to increase by 1.2 per cent in 2026 to a record 8.94bn tonnes, despite growing calls for lower carbon emissions, as disruptions to liquefied natural gas supplies from the Middle East drive up gas prices and encourage greater coal-fired power generation.
According to the International Energy Agency’s (IEA) Coal Mid-Year Update 2026, the conflict in the Middle East has disrupted global energy markets, even though virtually no coal shipments pass through the Strait of Hormuz.
The sharp reduction in LNG shipments through the strategic waterway has pushed natural gas prices higher, prompting countries with gas-fired power plants and available coal capacity to increase their reliance on coal.
The IEA said the development has contributed to stronger-than-expected coal consumption in Europe, Japan, South Korea, China and other markets.
China has also increased its coal consumption for chemical production amid higher oil prices, while expectations of a particularly strong El Niño weather pattern could further increase coal demand in major Asian markets.
Countries including India and Viet Nam are expected to record higher coal use as increased cooling needs and lower hydropower output raise demand for coal-fired electricity.
The latest forecast reverses the IEA’s earlier expectation that global coal demand would decline slightly in 2026.
The outlook for 2027 remains uncertain and will depend significantly on developments around the Strait of Hormuz. A recovery in LNG flows and a decline in natural gas prices towards pre-conflict levels could reduce coal demand, while prolonged disruption to LNG shipments could lead to further increases.
Global coal production, meanwhile, is expected to decline in 2026 after reaching a record level in 2025, although output is projected to remain above 9bn tonnes for the third consecutive year.
The decline is largely linked to lower production in China, the world’s largest coal producer, following safety inspections triggered by a major mine accident in May.
As the gap between global coal production and consumption narrows, the large build-up in coal inventories recorded in recent years is expected to ease.
Global coal production is projected to rise slightly in 2027 as Chinese output recovers.
The IEA also expects international coal demand to remain above previous forecasts, driven partly by lower domestic production in China and stronger demand from import-dependent markets such as Japan and South Korea.
Higher natural gas prices have encouraged greater coal use in those countries, while tighter supply conditions are contributing to higher coal prices globally.
