Coal makes a comeback, fueled by war in the Middle East

Subscribe to enjoy similar stories.Coal is making a comeback.Countries around the world are returning to the highly polluting but reliable source of power after the Iran war effectively shut the Strait of Hormuz and cut off around 20% of global liquefied natural gas supplies.Taiwan is restarting idled coal-fired power plants and South Korea boosted the amount of electricity it generated from coal by more than a third last month. In Europe, Italy has put its coal plants on standby as it girds for a prolonged energy shock.Spot coal prices at Australia’s Newcastle port, a key supplier to Asia, have jumped 12% since the war started.

That benchmark briefly topped $140 a metric ton in mid-March, the highest level since late 2024, though far below the $440 reached in the wake of Russia’s invasion of Ukraine in 2022.The comeback has echoes of 2022, when tight gas supplies following the start of Russia’s war in Ukraine led countries around the world back to coal in order to keep power flowing to homes and factories. At that time, Europe led the coal purchases, with global competition for the fuel causing a shortage that drove benchmark prices to new records.This time, the shift back to coal is most pronounced in Asia, where some countries face imminent gas shortages.Almost 90% of the total LNG volumes exported via the Strait of Hormuz are typically destined for Asia.

But since the war started, only three ships with LNG have passed through the crucial waterway. The last Qatari LNG cargo headed for Asia left the Persian Gulf before the war.