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Global Coal Demand to Hit Record High in 2026 Amid Middle East Conflict, El Nino Effects, IEA Says

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Global coal demand is expected to rise to a record high in 2026 as the Middle East conflict led to a surge in natural gas prices, encouraging coal-fired power generation across several key markets, according to the International Energy Agency's Coal Mid-Year Update released on Thursday.

The agency expects global coal consumption to rise 1.2% to 8.94 billion tonnes this year, reversing its December forecast for a slight decline.

This was primarily attributed to the ongoing military conflict in the Middle East, along with an unusually strong El Nino weather pattern.

China's coal demand is forecast to rise 1% to 5 billion tonnes in 2026, supported by strong electricity demand, weak wind generation and higher LNG prices. Higher oil prices have also boosted coal-to-chemicals production in the country, the report said.

India, is similarly expected to report a 4.2% rise in consumption to 1.35 billion tonnes, amid reduced hydropower availability due to warmer than average temperatures.

In Korea, coal demand is now forecast to rise 6% to 119 million tonnes, reversing earlier expectations for a decline, as low nuclear availability and higher natural gas prices boost coal-fired generation.

According to the agency, its outlook for 2027 depends to a great degree on developments along the Strait of Hormuz, with coal demand expected to decline by 0.4% to 8.91 billion tonnes, if LNG flows recover to pre-war levels, but if they continue to remain constrained, coal consumption could increase further.

On the supply side, global coal production is expected to decline in 2026 before rebounding slightly by about 26 million tonnes in 2027, leaving output above 9 billion tonnes for a fourth consecutive year.

The report noted China's output hit by safety restrictions following a fatal mining accident in Shanxi province in May, while India is projected to continue expanding output.

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