Hormuz Blockade Pushes Global Coal Investment to 14-Year High, IEA Says
The IEA forecasts $180 billion in coal spending in 2026 as Asian nations replace Hormuz-blocked LNG with domestic coal at a pace unseen since 2012.
Global coal investment will reach $180 billion this year, up 4% from last year and the highest total since 2012, the International Energy Agency said, as the blockade of the Strait of Hormuz forces Asian economies to replace disrupted gas supplies with coal at home.4
The Strait handles nearly 20% of global LNG shipments, according to industry estimates, and its closure exposed a dependency that Asian buyers had long accepted as manageable. Before the conflict, Asian countries were purchasing 80% to 90% of Gulf oil and gas exports, the IEA noted. Qatar compounded the disruption by halting LNG production as early as March 2 (2026-03-02), eliminating one of the region's most significant gas supply sources almost immediately after hostilities began.4,2,3
The response in physical markets has been swift. Global coal shipments jumped 14% year-on-year in June 2026, driven by a 41% year-on-year surge in Chinese imports as Beijing sought to offset weaker domestic mine output and meet rising power demand, according to data reported by Dry Cargo Magazine and MarineLink. Since the start of 2026, global coal shipments have risen 3% year-on-year — a reversal of the declining trend seen in preceding years.6,7
China is not the only buyer accelerating purchases. BIMCO data showed coal shipments to South Korea, Japan, and the European Union surged 27% year-on-year in the week of May 11 (2026-05-11), as importers sought to replace gas supply trapped behind the Strait. Oilprice.com reported that global coal imports were tracking toward their third-highest monthly level on record at that point.2
Prices have followed demand, though not without ceiling. Spot coal at Australia's Newcastle port climbed 12% from the start of the conflict, according to industry data. Newcastle physical coal stood at $139.85 per tonne on September 10 (2026-09-10). Analysts noted that prices remain well below the records reached after Russia's invasion of Ukraine in 2022, but expect continued upward pressure if LNG shortages persist.3
Asian LNG prices tell the same story from the gas side. The JKM benchmark was $24.68/MMBtu on September 10 (2026-09-10), sustained by supply constraints that make gas a less viable alternative for utilities weighing fuel costs ahead of the northern hemisphere winter.8
The coal supply picture is being complicated simultaneously on multiple fronts. A deadly mining accident in China's biggest coal-producing region and mounting policy disruption around Indonesian exports are choking global supply, analysts and industry officials told Mining.com in June 2026 (2026-06-16), with potential to push prices further as spot buyers compete for limited tonnage. Tighter supply coinciding with accelerating demand removes one of the standard corrective mechanisms in commodity markets.5
Coal spending had already been rising for six consecutive years before the Hormuz crisis added new impetus, the IEA noted. The agency said confidence in the reliability of transit through the Strait has been severely eroded, hardening energy-security thinking across Asia in ways that plant procurement and grid investment plans will reflect for years. Wood Mackenzie analysts said energy security concerns are accelerating coal usage across Asian and European markets and delaying coal plant retirements that had been scheduled under existing decarbonization programs.4,2
Power demand fundamentals give the shift durability. China's electricity consumption is forecast to rise 5.5% and India's 7%, according to an Asian Power report from late July 2026 (2026-07-26). With gas costs elevated and supply uncertain, incremental generation is being directed toward coal rather than gas across much of Asia.8
The IEA's own longer-run projections cut against the immediate trend. Its Electricity 2026 report forecast coal's share of the generation mix eroding over the rest of the decade as renewables and nuclear take ground — solar PV alone expected to add more than 600 TWh annually by 2030, with renewables and nuclear together reaching 50% of the global power mix by the end of the decade. Global power demand is set to grow more than 3% per year on average through 2030, the agency said, but expects non-coal sources to capture the bulk of new generation.1
Those projections predate the full scale of the Hormuz disruption, and the $180 billion investment figure is already priced on a different set of assumptions. Indonesian export policy and the pace of Chinese domestic mine output recovery are the two near-term variables most likely to shift the coal trade balance before winter demand peaks.5,4