Rising gas prices push global coal demand higher, IEA says

The International Energy Agency warned that tighter LNG flows through the Strait of Hormuz, caused by the U.S. and Israel's conflict with Iran, have pushed natural-gas prices up, leading to a rebound in global coal demand for 2026. Countries that operate both gas-fired and coal-fired power stations are turning to coal to offset higher fuel costs, boosting consumption in Europe, Japan, South Korea, China and other regions.

The agency expects this shift to persist through 2027 unless LNG shipments recover and gas prices fall. Coal production is projected to decline after reaching a historic high last year, largely because China, the world’s top producer, has cut output after safety inspections following a serious mine accident. Additional drivers include China’s increased coal use for chemicals, higher oil prices, and a strong El Niño event that may raise electricity needs in Asia, while India and Vietnam may also lean more on coal for cooling and reduced hydro power.