The Middle East conflict has dealt a lasting blow to Gulf energy infrastructure, causing billions of dollars in damage and pushing energy security to the top of the global agenda.
New research from Rystad Energy finds the fallout is driving a significant near-term surge in Asia-Pacific thermal coal demand, with an additional 150 million tonnes of cumulative consumption projected through 2030.
Roughly half of that volume is expected to materialise in 2026 alone, driven not by a policy reversal but by a supply gap.
A liquefied natural gas shortfall of an estimated 35 million tonnes is forecast for this year.
That gap is forcing gas-dependent utilities across the region to run existing coal capacity harder, a shift reinforced by regulatory cap removals across Northeast Asia.
At the centre of the disruption sits Qatar’s Ras Laffan facility, which sustained damage in the conflict and triggered force majeure, removing close to 10.2 million tonnes per annum of LNG supply to Asia.
The partial shutdown is expected to extend through late summer, tightening regional gas markets and pushing the Japan Korea Marker benchmark near three-year highs.
With the region unable to easily replace that volume, roughly 90 terawatt-hours of power generation have shifted directly to coal-fired sources.
Rystad Energy projects incremental coal consumption in Asia will rise by close to 70 million tonnes in 2026 under a sustained tight gas market scenario, driven by existing coal-fired fleets running at higher utilisation rates rather than large-scale new capacity additions.
The scale of the pivot is already visible in the data. Japan’s coal-fired generation grew 11 per cent even as its gas output fell 13 per cent.
South Korean and Japanese coal imports are tracking more than 50 per cent and 20 per cent above year-ago levels for May, respectively.
Tonmit Talukdar, Analyst for Coal Research at Rystad Energy, characterised the shift as a structural reality check rather than a directional reversal.
The response so far, Talukdar noted, remains more contained than the 2022 Russia-Ukraine crisis, when disruptions to Russian gas triggered a sharp global coal demand surge.
At that time, renewable capacity additions were limited and thermal coal inventories across major Asian markets were significantly lower.
Strong coal inventories and record alternative energy availability in India, China and other major Asian economies have prevented comparable strain this time.
Until storage, grid flexibility and firm low-carbon capacity scale sufficiently to cover peak demand and periods of low wind or hydro output, coal will continue to serve as the system’s fallback.
Against that backdrop, the Newcastle 6,000 kcal benchmark for seaborne thermal coal is expected to average around $125 per tonne in 2026 before easing to $115 in 2027, as nuclear restarts in Northeast Asia and gradually improving LNG supply conditions ease regional fuel tightness.
Incremental demand growth is concentrated in gas-exposed power systems across the region. Japan leads the increase, with South Korea and Taiwan adding higher coal burn from LNG supply disruptions and reduced nuclear output.
In Southeast Asia, Vietnam, Thailand and the Philippines are running coal fleets harder to offset tighter gas balances, while China remains comparatively insulated by its low gas penetration in the power sector.
In a downside scenario where hostilities resume, Rystad Energy estimates coal demand could rise by approximately 90 million tonnes in 2026 alone, with cumulative near-term demand reaching roughly 190 million tonnes.
Despite the scale of the near-term response, no major producer has moved to sanction large-scale new coal mining projects or materially extend mine lives, a marked contrast to the period following Russia’s 2022 invasion of Ukraine.
Governments have largely characterised recent demand increases as emergency-driven rather than a structural policy shift.
The key signal to monitor remains capital allocation, where any meaningful move by producers such as Glencore, BHP, Adaro or Bumi toward new mine commissioning or significant life extensions would indicate a more durable shift in industry expectations.
For now, such investment responses remain limited, suggesting producers still view current conditions as cyclical.
