Global Coal Demand Surges as Persian Gulf LNG Supply Remains Constrained

Key Facts

1LNG flows from the Persian Gulf remain over 75% lower than levels seen before February 28th.

2European November natural gas benchmark contracts are trading above 81 euros per MWh.

3Asian spot LNG prices have surpassed European prices, drawing cargoes toward the East.

Liquefied natural gas (LNG) flows from the Persian Gulf remain more than 75% lower than levels recorded before February 28th, driving a surge in global coal demand. Reuters reported that only 21 LNG cargoes exited the Strait of Hormuz in September, a significant decline from the more than 60 cargoes typically seen before the conflict began.

European natural gas benchmark contracts for November are trading above 81 euros per MWh, while Asian spot LNG prices have surpassed European levels to draw cargoes eastward, according to OilPrice.com. Coal has emerged as a primary substitute due to being approximately 80% cheaper than LNG, with Australian benchmark coal trading at an equivalent of $5.40 per mmBtu compared to $26 for LNG.