KEY POINTS
- The IEA forecasts global coal demand rising 1.2 percent to a record 8.94 billion tonnes in 2026, reversing its earlier call for a slight decline.
- Hormuz disruptions from the US-Iran war lifted gas and oil prices, pushing Europe, Japan, Korea, China and others to burn more coal.
- Coal output is set to fall this year but stay above 9 billion tonnes, with Chinese production curbed after a May mine accident and safety inspections.
Global coal demand is forecast to rise 1.2 percent in 2026 to a record 8.94 billion tonnes, driven by the Middle East conflict, the International Energy Agency said.
The reversal is striking, since the IEA had previously expected global coal demand to slip slightly this year. Moreover, disruptions to oil and liquefied natural gas shipments through the Strait of Hormuz since the US-Iran war began have pushed up prices and spurred more coal-fired power generation.
Gas fleets lean on coal
The switch has concentrated where alternatives exist. Specifically, countries with gas-fired power fleets and spare coal capacity have burned more coal to offset costlier and scarcer gas. Consequently, coal use has run higher than expected in Europe, Japan, Korea, China and other markets.
That shift explains the upward revision. According to the IEA, stronger-than-forecast demand across those regions lifted the global total to a fresh record, overturning its earlier call for a modest decline. Additionally, the rebound shows how quickly power systems fall back on coal when gas supply tightens.
An uncertain 2027
However, next year’s path looks far less clear. Specifically, the IEA said 2027 demand hinges on whether shipping traffic through Hormuz recovers. If it does, coal demand could ease, but if the strait stays largely closed to LNG, coal demand could climb further still.
Supply, meanwhile, is tightening even as demand grows. Furthermore, global coal production is expected to fall this year, though it should stay above 9 billion tonnes for a third straight year. Additionally, output in China, the world’s largest producer, dropped after safety inspections followed a major mine accident in May, sharply curbing production.
Ultimately, the report underscores how geopolitics can stall the energy transition. Since a single chokepoint now shapes global coal flows, the fuel’s near-term trajectory depends less on climate policy than on whether the Middle East conflict eases and Hormuz reopens to normal gas traffic. That leaves coal, long expected to fade, firmly back in focus.
