Coal surges to 14-month high as Iran conflict ignites energy crisis
Thermal coal prices hit $138 per metric ton as Strait of Hormuz disruptions force fuel-switching
Coal prices have surged to their highest level in 14 months as escalating conflict involving Iran triggers a broader energy crisis, disrupting global liquefied natural gas supplies and forcing utilities to reconsider coal as an alternative fuel source.
Thermal coal prices reached $138 per metric ton on Tuesday, the highest since January 2025, while coking coal traded at $219.75 per metric ton, according to Trading Economics. The surge follows a series of military strikes that began February 28, 2026, involving the United States, Israel, and Iran, which has severely disrupted energy flows through one of the world's most critical maritime chokepoints.
The crisis intensified after QatarEnergy halted production at its Ras Laffan hub, the world's largest LNG export facility, affecting approximately 20% of global LNG supply. Simultaneously, traffic through the Strait of Hormuz—which handles roughly one-fifth of global oil consumption—has plummeted by 70% following attacks on commercial vessels and insurers' refusal to provide war-risk coverage, maritime intelligence data shows.
The disruption has sent shockwaves across energy markets. Brent crude oil climbed above $83 per barrel, its highest level since July 2024, while European natural gas prices surged as much as 40% before paring gains. In response, US coal producers have rallied sharply, with Peabody Energy rising 4.9% on Monday and gaining an additional 6.6% as coal prices hit a 52-week high, market data indicates. Alliance Resource Partners also posted gains, trading up 1.85% to $26.98.
The rally reflects growing expectations of fuel-switching, particularly in Europe and Asia, where utilities facing soaring gas prices are increasingly likely to turn to coal for power generation. This marks a sharp reversal from recent years, when climate policies had pushed many countries to phase out coal in favor of cleaner-burning natural gas and renewables.
Analysts caution that the coal rally's sustainability depends largely on the duration of the Middle East conflict and the pace of LNG supply restoration. Qatar has not indicated when its Ras Laffan facility might resume operations, and the Strait of Hormuz remains effectively closed to most commercial traffic. For now, coal producers find themselves in the unlikely position of serving as a backstop for global energy security, despite long-term pressures to transition away from fossil fuels.
The situation continues to evolve rapidly, with investors closely monitoring diplomatic developments and military actions that could further roil energy markets. For coal companies, the immediate outlook is bullish—but the longer-term trajectory remains tied to the same geopolitical tensions now driving short-term gains.