Coal Demand Heading for Another Record as Disrupted LNG Flows Reshape Power Markets, IEA Says

The International Energy Agency (IEA) said Thursday that global coal demand is on track to reach a new all-time high this year, as elevated liquefied natural gas (LNG) prices push major economies to lean harder on coal-fired power generation.

In its Coal Mid-Year Update 2026, the agency linked the shift directly to the disruption of LNG shipments through the Strait of Hormuz, the chokepoint at the mouth of the Persian Gulf that carries a large share of the world’s seaborne gas supply. With the passage effectively blocked, LNG spot prices have climbed sharply, changing the economics of power generation across Asia and Europe.

According to the IEA, the price surge has prompted countries including China, India, Japan and South Korea — long among the largest importers of seaborne LNG — to increase their reliance on existing coal-fired capacity for electricity. European markets, which have historically used gas as a flexibility fuel, are also burning more coal in the changed environment.

One mitigating factor noted in the report: the Middle East is not a significant coal exporter, so the region’s conflict has not directly interrupted global coal shipping lanes. That has left coal supply chains largely intact even as gas flows have been squeezed, widening the price gap between the two fuels and reinforcing the substitution effect.

The report underscores how sensitive power-fuel choices are to midstream availability — the network of shipping routes, terminals and chokepoints that moves energy between producing and consuming regions. When LNG supply tightens, coal often absorbs the difference in markets where both fuels compete in the power mix, particularly across Asia, where coal remains a backbone of electricity generation.

The disruption also carries implications for shipping and logistics operators that move energy commodities globally. Among the companies monitored by EnergyPressWire, International Seaways (INSW) — which closed at $104.85 on Thursday, up 0.51% from the prior close of $104.31, with a market capitalization of roughly $5.19 billion — operates in the tanker market that transports crude and refined products through the same trade routes now under strain.

The IEA typically publishes interim coal updates mid-year alongside its full annual coal report, making the new record forecast a marker of how quickly fuel-switching can respond to supply shocks rather than policy shifts.

What to watch

• The IEA’s next coal market update and any revisions to full-year demand forecasts.
• Status of LNG transit through the Strait of Hormuz and resulting spot price movements in Europe and Asia.
• Upcoming earnings reports from shipping companies, including INSW, for commentary on tanker rates and route disruptions.
• Monthly power-generation data from China, India, Japan and South Korea showing the pace of coal-to-gas switching in either direction.

Source: original release