Asia's Coal Burn Rises as Hormuz Blockade Reshapes Regional Fuel Mix
Asia imports roughly 90% of Hormuz-routed oil and LNG, making it the primary casualty of a blockade that other major consuming regions can partially sidestep.
A coal-sector ETF gained 2.93% on Wednesday (2026-07-15) as Asian buyers continue substituting coal for disrupted LNG volumes, with physical Newcastle coal trading at $119.35 per tonne. JKM Asian LNG stood at $16.65 per MMBtu. Both readings reflect a fuel mix that has been reconfigured by the closure of the Strait of Hormuz since the outbreak of war between the United States, Israel and Iran.5,2
Asia's position in this crisis is unlike any other region's. Roughly a fifth of global daily oil and LNG passes through the strait, and approximately 90% of those volumes are bound for Asian destinations, according to Carbon Brief analysis. There is no comparable alternative routing at the scale required.3
Asian governments moved quickly when the blockade set in. AP reporting from mid-May (2026-05-19) described countries across the continent ramping coal burn as the Iran war disrupted oil and gas shipments. The continent relies on imported fuel, much of it transiting Hormuz, for a large share of power generation and industrial activity.5
LNG prices in Asia surged above $25 per MMBtu following the conflict's outbreak, after damage to Qatar's export infrastructure combined with the Hormuz closure to cut supply forecasts sharply, according to analysis from late March 2026.6 JKM has retreated to $16.65 per MMBtu as of Wednesday (2026-07-15), though the market remains elevated against pre-war levels.
The coal substitution carries environmental costs that analysts have begun to calculate. "The shift will impose substantial environmental and public health costs," said Dinita Setyawati, senior energy analyst at Ember. Over a longer horizon, some analysts argue the crisis could accelerate Asia's transition to domestic renewables, reducing dependence on imported fuel.2
Australia illustrates how the exposure runs through indirect channels. Only around 15% of Australia's oil imports cross the strait directly, but the country depends heavily on refined fuel products exported from Asian refiners, and those refiners rely on the strait for between 40% and 70% of the crude oil they process, according to reporting from mid-May (2026-05-19). A sustained blockade therefore tightens Australian fuel supply through the refining chain rather than through crude imports alone.4
The United States is far better insulated. Roughly 7% of US oil imports travel through the strait, limiting the direct physical shock.4 The International Energy Agency was planning to recommend releasing 400 million barrels from strategic reserves, the largest emergency release in IEA history, to cushion the global impact.7
At least 60 countries had announced emergency measures by late May (2026-05-20), introducing nearly 200 policies covering fuel savings, consumer subsidies and domestic supply alternatives.3 The scope of that response reflects how far the disruption has spread from the Gulf.
Europe's exposure runs through a different channel and on a longer fuse. A commodities investment manager told Montel at German Energy Day on Thursday (2026-05-21) that the region's current price shock would become a supply crisis if the Hormuz closure extended to a full year. Europe does not rely directly on Gulf crude, but it competes for the same pool of flexible LNG cargoes from the US and Australia as Asian buyers bidding to replace disrupted Gulf supply. ICE Endex TTF front-month traded at €54.41 per MWh on Wednesday (2026-07-15).1
Duration is what everything hinges on. Traders initially expected disruptions to last days, not weeks, according to the Economist's reporting in mid-May (2026-05-17). Whether Iraqi oil exports, also disrupted by the conflict, resume through alternative routes, and whether Qatar's LNG export capacity is restored, will determine how deeply Asia's coal switch becomes embedded before any reversal is feasible.8