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Global coal demand set to reach record as Iran war cuts gas supplies

Global coal demand set to reach record as Iran war cuts gas supplies

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IEA reverses forecast, now projects 8.94 billion tonnes burned in 2026 as LNG shortages push utilities back to coal

Today: Record coal demand forecast draws wide attention

Overview

Updated 1 hour ago

In 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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Key Indicators

8.94 billion tonnes
Projected 2026 global coal demand
Record level, reversing the IEA's January forecast of a slight decline.
+1.2%
Year-over-year change in coal demand
Driven by LNG shortages from Hormuz disruption and a strong El Niño raising cooling demand.
70%
China and India share of global coal demand
The two largest consumers dominate the global picture.
5 billion tonnes
Projected 2026 China coal demand
Up 1% year over year, per the IEA's Coal Mid-Year Update 2026.
1.353 billion tonnes
Projected 2026 India coal demand
Up 4.2%, reversing last year's temporary drop.
€70
European TTF gas benchmark price
High gas prices make coal-fired generation economically attractive again in Europe.

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People Involved

Organizations Involved

Timeline

February 2026 September 2026

5 events Latest: Today
Tap a bar to jump to that date
  1. Record coal demand forecast draws wide attention

    Today News

    Coverage spreads across major outlets as analysts note the Iran war is pushing economies back to coal despite climate commitments.

  2. IEA releases Coal Mid-Year Update 2026

    Report

    IEA projects record coal demand of 8.94 billion tonnes for 2026, up 1.2%, reversing its January forecast of a decline.

  3. US resumes large-scale strikes on Iran

    Military

    The US accuses Iran of violating the ceasefire terms regarding the Strait of Hormuz and resumes strikes; LNG shipments through the strait slump.

  4. Ceasefire memorandum signed

    Diplomatic

    Washington and Tehran sign a memorandum providing for an immediate cessation of hostilities on all fronts, including Lebanon.

  5. US and Israel launch war against Iran

    Military

    US and Israeli forces begin military action against Iran, disrupting regional shipping through the Strait of Hormuz.

Scenarios

1

Hormuz reopens, coal demand peaks in 2026

Uncertain Resolves by Mar 15, 2027

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.

2

Hormuz stays closed, coal hits another record in 2027

Possible Resolves by Mar 15, 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.

3

Partial LNG reopening, coal plateaus near record

Uncertain Resolves by Mar 15, 2027

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.

October 1973 - March 1974

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.

Then

Western economies entered recession and adopted emergency conservation measures.

Now

The shock created lasting incentives for fuel switching and led to creation of the IEA in 1974 to coordinate energy security.

Why this matters now

Shows how a geopolitical supply disruption can abruptly reorder energy consumption, the same mechanism driving the current coal shift.

March 2011

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.

Then

Coal's share of German electricity rose for several years.

Now

Germany's coal exit was pushed to 2038, and the country remains coal-dependent during its energy transition.

Why this matters now

Illustrates how a single energy policy decision can lock in coal reliance for years, similar to how the war is cementing coal's role.

2022-2023

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.

Then

Europe burned more coal for two winters despite climate commitments.

Now

The episode demonstrated that energy security can override decarbonization timelines during supply shocks.

Why this matters now

Direct precedent: a geopolitical conflict squeezed gas supplies and pushed Europe back toward coal, mirroring today's shift.

Sources

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