Asia Recoils to Coal as Iran Crisis Squeezes LNG Supply

Three months after Iranian strikes on Qatar's Ras Laffan LNG complex knocked out roughly 12.8 million tonnes of annual export capacity, Asia's power sector is running on coal at rates not seen in years — and the trajectory is still worsening. The Ras Laffan damage, which QatarEnergy estimated will take three to five years to repair, triggered force majeure across Qatar's long-term supply contracts. With the Strait of Hormuz effectively closed since late February, global seaborne LNG shipments fell 8% year-on-year in April. Asian spot LNG has since doubled, exceeding $25 per million British thermal units. Brent crude stood at $110.95 on May 19. India's power grid bore the brunt first. Peak demand hit a record 257 GW during a May heatwave, with coal covering more than 75% of supply at peak. Authorities ordered coal plants running on imported fuel to operate at full capacity and restarted idled gas plants. India imports roughly 60% of its LNG through the Hormuz chokepoint, making domestic coal the default fallback. South Korea's shift was sharper and more deliberate. Coal-fired output surged 39.7% year-on-year in April to 10,733 GWh — the largest monthly increase since August 2019 — while gas generation fell 6.4%. Seoul scrapped the spring cap that had limited coal plants to 80% capacity, boosted Russian coal imports 95% in the first quarter, and passed a $17 billion emergency budget. Government officials said the crunch could persist three to six months. Japan moved in late March, lifting operational caps on coal plants and allowing older units to run at full capacity for up to a year from April. Coal generation rose 11.1% year-on-year that month; gas-based electricity dropped 12.9% to 16,447 GWh. Early May data through the 10th showed acceleration: coal up 18.3%, gas down 23.4%. The broader commodity signal is visible in trade flows. Coal shipments to South Korea, Japan, and the EU rose 27% year-on-year in March, putting global coal imports on pace for their third-highest monthly level on record. The Newcastle benchmark has climbed 12-13% from late-February levels. The policy reversals are striking given where governments were three years ago. The G7 in 2023 agreed to exit unabated coal power between 2030 and 2035. Germany's Chancellor Friedrich Merz said in March the country may slow its coal phase-out schedule. Thailand brought back two coal plants decommissioned in 2025. The key variable now is duration. Qatar's repair timeline runs to 2029-2030 at the earliest, which means Asian utilities face years, not months, of elevated LNG costs. If the Hormuz closure persists, watch for Japan and South Korea to accelerate nuclear restarts — both have idled capacity that could come back within 12-18 months. A secondary risk worth tracking: export restrictions from Australia and Indonesia if domestic coal shortages develop as their own utilities compete for the same supply.