Persian Gulf LNG flows remain far below their pre-war level while heating demand rises ahead of winter. Coal is roughly 80% cheaper than LNG, and the IEA expects global coal demand to reach an all-time high this year. Indonesian export curbs could tighten supply during peak season.
The LNG shortage is deepening, and coal is roughly 80% cheaper than LNG, encouraging Asian and European buyers to increase coal imports ahead of winter. Liquefied natural gas flows from the Persian Gulf are still over 75% lower than they were before February 28th.
Gas prices sit far above coal
In Europe, the November natural gas benchmark contract is trading at over 81 euros per MWh. In Asia, the spot price for November cargoes topped $26 per million British thermal units, up from $25.25 earlier this week.
Australian benchmark coal, by contrast, trades at the equivalent of $5.40 per mmBtu. In September, the International Energy Agency said it expected coal demand this year to rise to an all-time high.
Hormuz attacks and force majeure limit cargoes
Shipping data compiled by Reuters shows that an estimated 21 LNG cargoes exited the Strait of Hormuz in September, the highest monthly number since the Iran war began but down from over 60 before the war. QatarEnergy has an extended force majeure in place, and tanker attacks have become more frequent. Over the last two weeks, there have been as many as 20 attacks on vessels in the Persian Gulf, most of them tankers.
Citing Kpler data, Reuters' Gavin Maguire reports that Japan, China and South Korea imported a collective 122 million tons of coal in the third quarter. The three were importing coal at a rate of 143 million tons per quarter in both the last three months of 2024 and of 2025. In Europe, coal imports into the European Union were up by 43% on the year in June.
Indonesian curbs add supply risk
Indonesia, the world's largest coal exporter, pursued production quotas and policy tweaks that saw its exports drop by as much as 23% in August. The IEA expects the country's coal production to decline this year by over 12 million tons. This could drive coal prices higher during peak demand season, but coal prices are unlikely to come close to LNG prices.
Source: Oilprice.com
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