IEA: Global Coal Demand Set to Hit Record High as Iran War Chokes LNG Supply
The International Energy Agency says global coal consumption is set to reach a record 8.94 billion tons in 2026 after forecasts were revised upward following a disruption to LNG supplies through the Strait of Hormuz. Higher gas and LNG prices have driven utilities in major markets to rely more on coal-fired power, the IEA reported in its Coal Mid-Year Update 2026.
Why It Matters
The shift reverses an earlier expectation of a slight decline in coal use and highlights how geopolitical disruption in the Gulf and an unusually strong El Niño are reshaping short-term fuel choices across large economies. If LNG shipments through the Strait of Hormuz remain constrained, the IEA warns coal demand could climb even higher next year.
Key Facts
- IEA report: Coal Mid-Year Update 2026
- Projected change in global coal demand: Up 1.2% in 2026
- Projected global coal consumption (2026): 8.94 billion tons
- Chinese coal demand projection: Up 1% to 5 billion tons
- Indian coal demand projection: Up 4.2% to 1.353 billion tons
The International Energy Agency has revised its outlook for coal consumption after supply shocks to the global gas market pushed buyers back toward coal-fired power. In its Coal Mid-Year Update 2026, the IEA now expects world coal use to rise 1.2% this year, reaching about 8.94 billion tonnes — a new record — reversing an earlier forecast for a small decline. The agency attributed the turnaround largely to a sharp tightening in LNG flows through the Strait of Hormuz after the Iran war began more than six months ago. While the Middle East does not export significant amounts of coal, the slump in LNG shipments raised natural gas prices, prompting utilities in markets such as China, India, Japan, South Korea and parts of Europe to burn more coal for electricity. The update also cited an unusually strong El Niño as a contributing factor to the change in demand. The IEA’s country-level projections show China’s coal use rising about 1% to roughly 5 billion tonnes and India’s increasing 4.2% to about 1.353 billion tonnes, reversing a small dip seen last year. The agency warned that if LNG flows through the Strait of Hormuz remain materially restricted into next year, global coal consumption could climb to even higher records. The findings underscore how short-term energy security shocks can alter fuel mixes across major economies, according to the IEA’s mid-year assessment.