Coal Holds Near 16-Month High

Coal held above $130 per ton, hovering near its highest levels since November 2024 after Indonesia unveiled plans to prioritize domestic supply as the Middle East war drove prices higher. President Prabowo Subianto’s administration has signaled it will introduce rules to ensure its expanding industrial sector can access cheaper coal before any volumes are exported. Indonesia is the world’s largest exporter of coal for power generation, accounting for roughly 50% of global supply. A prolonged disruption to oil and gas flows through the Strait of Hormuz could force power generators in major economies to rely more heavily on coal for electricity. Coal remains the most carbon-intensive fossil fuel, but despite efforts by environmentalists, financiers, and governments to curb its use, demand has stayed resilient. Global thermal coal demand has increased in each of the past two years, according to the IEA, particularly in India and Southeast Asia.

Coal climbed toward $140 per ton, approaching its strongest levels since November 2024 as fears of prolonged global supply disruptions from the Middle East conflict pushed energy prices higher. Brent crude futures surged back above $100 a barrel after Iran’s new supreme leader, Mojtaba Khamenei, pledged to keep the Strait of Hormuz effectively closed while Tehran intensified attacks on regional oil and transport facilities. US President Donald Trump also said preventing Iran from obtaining nuclear weapons and threatening the Middle East is more important than the cost of oil. Meanwhile, several major energy traders have begun declaring force majeure to customers after Qatar’s LNG shutdown rippled through global gas markets. Supply shocks in oil and gas typically increase demand for fuel switching in the power sector. With many Asian economies reliant on Qatari LNG, the region may be forced to ramp up coal-fired power generation if the disruption persists.

Coal prices retreated toward $130 per ton after surging to as high as $150 earlier in the week, as falling oil prices eased fears of prolonged global energy supply disruptions. Oil prices dropped back below $90 per barrel as the US and other major economies moved to curb energy costs. However, hostilities in the Middle East continued with no clear end in sight and the Strait of Hormuz remained effectively shut. Meanwhile, the largest LNG export plant in Qatar has halted shipments for five consecutive days, the longest stretch since 2008, raising the risk of further gains in fuel prices. Supply shocks in oil and gas typically increase demand for fuel switching in the power sector. With many Asian economies reliant on Qatari LNG, the region may be forced to ramp up coal-fired power generation if the disruption persists. Coal resources are also gaining strategic importance for China, both as an energy buffer and as a key feedstock for the chemical industry.