IEA Upgrades Coal Demand Forecast to Record High as Hormuz LNG Squeeze Drives Asian Switching
Soaring LNG spot prices from the Strait of Hormuz blockage are pushing China and India toward coal, with global consumption now forecast to reach a record 8.94 billion tons in 2026.
The International Energy Agency said on Thursday (2026-09-10) that global coal consumption will reach a record 8.94 billion tons in 2026, a 1.2% increase from 2025 levels and a reversal of earlier projections that had expected demand to edge slightly lower. The IEA attributed the shift to soaring LNG prices caused by the Strait of Hormuz blockage, which is prompting economies across Asia to substitute cheaper fuels.7
China and India are driving most of the revision. The IEA forecasts Chinese coal demand rising 1% to 5 billion tons this year, while Indian demand is projected up 4.2% to 1.353 billion tons — an explicit reversal of the temporary slight decline India recorded in 2025. Newcastle coal physical prices were $140.75 per tonne on Friday (2026-09-11), up 0.64% on the session.7
JKM, the Asian LNG spot benchmark, gained 0.53% on Friday (2026-09-11) to $24.81 per MMBtu. At that price, coal is economically preferable for many Asian power generators. China's LNG imports had rebounded in May 2026 to 4.9 million tons, reversing a months-long decline triggered by the Middle East supply disruption, but sustained spot prices appear to be capping that recovery.3
India's trajectory tells a similar story. Gas consumption had returned to near pre-disruption levels by June 2026, with Equirus research noting broad-based demand growth across key sectors. But Equirus also flagged elevated LNG spot prices and rising global competition as near-term risks, and the IEA's revised coal forecast suggests they are already materialising.5
Russia was expected to absorb some of the displaced supply. After losing its European markets, Moscow targeted China as a replacement gas customer. Exports via the Power of Siberia pipeline were projected to rise more than 20% in 2025, approaching the line's maximum capacity of 38 billion cubic meters annually. Yet Russian gas production fell approximately 3.2% in the first half of 2025 to around 334.8 billion cubic meters, and Russian LNG output dropped 5.1% to about 16.5 million tons over the same period, according to federal statistics data reported by Bloomberg News in July 2025.2
The European business will not return. Russian gas now accounts for roughly 18% of European imports, against 45% in 2021, while EU oil imports from Russia have fallen to 3% from around 30% over the same period. Gazprom posted losses of nearly $7 billion in 2023, its first annual loss since 1999. The Russian economy ministry projected in May 2026 that pipeline gas exports outside the former Soviet Union would decline 10.7% from 2024 levels.1
None of that leaves Russia positioned to offset the LNG flows the Hormuz disruption has removed. Its pipeline infrastructure beyond the Power of Siberia corridor is limited, its LNG capacity is contracting, and the volumes it can redirect to Asia are already committed.2,1
The global LNG market was already taut before the disruption. Some 422 million tons were traded in 2025, according to Shell's LNG Outlook 2026, with around 180 million tons of new annual supply forecast to enter the market by 2030. That capacity, largely from North America, should ease tightness over a multi-year horizon. It provides no relief while Hormuz remains constrained and Asian buyers are repricing their fuel mix in real time.4
Global natural gas consumption rose 1.7% in 2025 to an all-time high of 4.202 trillion cubic meters, according to the Global Gas Report 2026, with Asia contributing 25 billion cubic meters of that growth, the Middle East adding 18 billion cubic meters, and Europe adding roughly 10 billion cubic meters. The demand base was already expanding before the disruption landed.6
ICE Brent crude front-month was at $109.95 per barrel on Friday (2026-09-11), up 0.85%, adding another layer of pressure on economies evaluating fuel economics across every part of their energy mix.
How long the Hormuz blockage persists will shape how much of the coal switching the IEA is projecting actually locks in. A swift resolution could deflate LNG spot prices quickly enough to reverse the switch, particularly where Chinese and Indian utilities retain fuel flexibility. A prolonged disruption would leave the 8.94-billion-tonne coal consumption figure looking like a floor. Russia's declining output means it will not be the variable that shifts either outcome.7,2