Conflict in the Middle East has led to a surprise return to coal as an energy source.

Coal remains the main alternative to natural gas for power generation in certain areas. Higher gas prices or reduced supply could easily rise coal consumption. Moreover, the current issues could lead to a reassessment of energy strategies with coal central to energy security, especially if the coal is produced domestically.

Any such move would be a major setback, after even China and India have just started to plateau coal use, but as energy markets have been shaken by the ongoing conflict in the Middle East and the effects of higher gas prices have been visible in China, Korea, Japan, Europe and beyond, with regulatory measures reinforcing the shift towards coal consumption in some markets.

In addition, the use of coal to produce chemical products in China has also risen, with higher oil prices improving the economics of coal-based alternatives.

The IEA Coal Mid-Year Update 2026, warns that, somewhat ironically, the El Niño weather phenomenon in 2026 is also expected to support coal demand by increasing cooling needs and reducing hydropower output in some major coal-consuming countries in Asia, such as India and Viet Nam.

The IEA’s annual Coal Market Report, published in December 2025, forecast a small decline in global coal demand this year, but since then, upward revisions have reversed the outlook. This Mid-Year Coal Update now forecasts that global coal demand will grow by 1.2 per cent in 2026.

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