The International Energy Agency announced that global coal demand will grow 1.2% in 2026, reaching 8.94 billion tonnes, an upward revision compared to previous forecasts that pointed to a slight decline in demand. The Paris-based organization attributed this unexpected rise to the increase in natural gas prices, which is favouring the use of coal in countries that have both gas and coal power plants.
The worsening of gas prices was caused by disruptions in liquefied natural gas transport through the Strait of Hormuz, due to the war of the United States and Israel against Iran. The conflict in the Middle East drastically reduced LNG flows through the strait, indirectly affecting the market and raising natural gas prices. The IEA warned that much depends on the recovery of maritime traffic through the Strait of Hormuz, with the effect potentially extending until 2027.
The situation is causing an increase in coal consumption in Europe, Japan, South Korea and the People's Republic of China, among other markets. China, in addition to importing more coal, is also using more of this fuel for the production of chemicals due to high oil prices. Furthermore, a particularly intense episode of the El Niño phenomenon may increase the need for electricity generation in Asia, and countries such as India and Vietnam may turn more to coal to compensate for lower hydroelectric production.
Coal production is expected to fall in 2026 after reaching a record high last year, while remaining above 9 billion tonnes for the third consecutive year. The main cause of this decline is related to China, the world's largest producer, where safety inspections carried out after a serious mine accident in May caused a significant reduction in production. The IEA concluded that the combination of higher-than-expected international demand and more limited supply is putting pressure on coal prices worldwide.
