Japan, South Korea Boost Coal Power as Iran War Sends Asian LNG Prices Up 62%
Updated
Updated · Reuters · May 12
Japan, South Korea Boost Coal Power as Iran War Sends Asian LNG Prices Up 62%
3 articles · Updated · Reuters · May 12
Japan and South Korea sharply increased coal-fired generation in April and early May as the Iran war squeezed LNG supply, with Japan's April coal output up 11.1% and South Korea's up 39.7%.
Qatar lost 17% of its LNG export capacity after Iranian retaliation to U.S.-Israeli attacks, pushing Asian spot LNG prices up 62% since the war began, far outpacing a 13% rise in Newcastle coal.
Gas-fired generation fell as utilities switched fuels: Japan's gas output dropped 12.9% in April to 16,447 GWh and South Korea's fell 6.4%, while nuclear supply also declined in both countries.
The shift is lifting coal trade, with May imports outside China and India projected to rise 9.4% to 31 million tons; Japan's and South Korea's imports are tracking for annual gains of more than 20% and 50%.
Analysts say the longer the war lasts, the more Asian utilities will favor coal for supply security, underscoring how conflict is reshaping regional power generation despite climate goals.
As Asia pivots to coal for security, is it ignoring a looming LNG supply glut that could crash prices?
Beyond energy prices, how is the Mideast war quietly driving up global food and shipping costs?
The Iran war exposed fossil fuel fragility. Are renewables the only path to true energy security?
Asia’s Energy Crisis 2026: LNG Shock, Coal Resurgence, and the Geopolitical Fallout of the Iran War
Overview
The ongoing Iran War has led to Iran effectively constraining the Strait of Hormuz, a critical chokepoint for global LNG shipments. This action caused a sharp 20% drop in global LNG supplies by May 2026, triggering a surge in gas prices worldwide. Industry experts widely expect the Strait to remain disrupted until at least the second half of 2026, with further interruptions likely. As a result, Asian and European countries are scrambling to secure alternative energy sources, leading to a rapid increase in coal consumption and delaying decarbonization efforts, while economic and environmental pressures continue to mount.