Global coal demand set to reach record as Iran war cuts gas supplies
Built WorldIEA reverses forecast, now projects 8.94 billion tonnes burned in 2026 as LNG shortages push utilities back to coal
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Overview
Updated 1 hour agoIn January, the International Energy Agency projected the world would burn slightly less coal this year. Now it expects a record 8.94 billion tonnes, up 1.2%, as the war with Iran cuts liquefied gas shipments through the Strait of Hormuz and makes coal the cheaper option for power generators.
China and India account for about 70% of global coal demand, and both are burning more. If the strait stays closed to gas into 2027, the agency warns, demand could climb to yet another record — a blow to countries trying to phase out the most carbon-heavy fossil fuel.
Why it matters
If the Strait of Hormuz stays closed, coal could set another record in 2027, adding emissions just as the world tries to cut them.
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Timeline
February 2026 September 2026
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Record coal demand forecast draws wide attention
Today NewsCoverage spreads across major outlets as analysts note the Iran war is pushing economies back to coal despite climate commitments.
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IEA releases Coal Mid-Year Update 2026
ReportIEA projects record coal demand of 8.94 billion tonnes for 2026, up 1.2%, reversing its January forecast of a decline.
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US resumes large-scale strikes on Iran
MilitaryThe US accuses Iran of violating the ceasefire terms regarding the Strait of Hormuz and resumes strikes; LNG shipments through the strait slump.
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Ceasefire memorandum signed
DiplomaticWashington and Tehran sign a memorandum providing for an immediate cessation of hostilities on all fronts, including Lebanon.
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US and Israel launch war against Iran
MilitaryUS and Israeli forces begin military action against Iran, disrupting regional shipping through the Strait of Hormuz.
Scenarios
Hormuz reopens, coal demand peaks in 2026
Discussed by: IEA analysts; the agency's report says the 2027 outlook depends on LNG trade resuming
If a durable ceasefire holds and LNG shipments resume through the strait, gas prices fall and utilities shift back from coal. The IEA would lower its 2027 coal forecast, making 2026 the peak year.
Hormuz stays closed, coal hits another record in 2027
Discussed by: IEA report; Bloomberg analysis noting demand could rise further next year if the strait remains closed
If the strait stays largely closed to LNG, gas prices remain high and utilities keep running coal units hard. The IEA projects demand could rise to a new record in 2027.
Partial LNG reopening, coal plateaus near record
Discussed by: Market analysts watching for partial LNG resumption through diplomatic channels
If LNG flows partially resume but gas stays expensive, coal demand holds roughly flat near the 2026 record rather than climbing or falling sharply.
Historical Context
3 moments from history that rhyme with this story — and how they unfolded.
1973 Oil Embargo (1973-1974)
Arab members of OPEC cut oil exports and embargoed the US and allies during the Yom Kippur War. Oil prices quadrupled within months, forcing consumers to shift fuels and ration energy.
Western economies entered recession and adopted emergency conservation measures.
The shock created lasting incentives for fuel switching and led to creation of the IEA in 1974 to coordinate energy security.
Shows how a geopolitical supply disruption can abruptly reorder energy consumption, the same mechanism driving the current coal shift.
Fukushima Nuclear Disaster (2011)
The Fukushima Daiichi meltdown after a tsunami pushed Germany to accelerate its nuclear phaseout. With nuclear capacity closing, Germany leaned on coal as a bridge fuel.
Coal's share of German electricity rose for several years.
Germany's coal exit was pushed to 2038, and the country remains coal-dependent during its energy transition.
Illustrates how a single energy policy decision can lock in coal reliance for years, similar to how the war is cementing coal's role.
2022 Russia-Ukraine Energy Crisis (2022-2023)
Russia cut natural gas flows to Europe after its February 2022 invasion of Ukraine. Germany and other countries that had planned coal phaseouts reactivated coal plants to keep power flowing.
Europe burned more coal for two winters despite climate commitments.
The episode demonstrated that energy security can override decarbonization timelines during supply shocks.
Direct precedent: a geopolitical conflict squeezed gas supplies and pushed Europe back toward coal, mirroring today's shift.
