How does the Iran war reshape the 'energy landscape': shifting major oil-and-gas customers toward coal and new energy?

Samantha Dart, Global Co-Head of Commodities Research at Goldman Sachs, warned: 'We are now facing a second, massive energy supply shock. If you’re in Asia and experience this again, you may revise your long-term strategy—relying more on coal, relying on coal for longer, accelerating renewable energy development, and reducing dependence on natural gas.' This assessment is already being validated by market actions. From Japan’s announcement to expand the use of inefficient coal-fired power, to India’s directive for coal plants to postpone maintenance and operate at full capacity, to multiple European countries re-evaluating their coal phase-out timetables, the narrative of natural gas as a 'transition fuel' is rapidly unraveling. Meanwhile, capital markets have already voted with their feet—leading Chinese battery and new-energy enterprises have significantly outperformed international oil majors in stock performance. The collapse of the 'transition fuel' narrative for natural gas—and coal’s strong resurgence in demand The natural gas supply shock triggered by the Iran war represents the second major energy crisis in less than four years since the Russia-Ukraine conflict. U.S. and Israeli strikes against Iran—and subsequent retaliatory attacks targeting Qatar’s Ras Laffan plant—could cause supply disruptions lasting several years. Europe’s benchmark natural gas price currently stands at around €54 per megawatt-hour, exceeding analysts’ threshold of €50/MWh, which is widely seen as the trigger for large-scale coal-power substitution. According to Bloomberg, analysts from the London Stock Exchange Group estimate that if Europe’s benchmark natural gas price remains near €50/MWh, coal-fired power generation across Europe this summer could rise approximately 20% year-on-year. The Netherlands, Poland, and the Czech Republic all face mounting pressure to increase coal consumption; Germany is even considering restarting mothballed coal plants to curb electricity prices. Data from BloombergNEF shows that since 2015, Europe’s installed coal-power capacity has declined by 45%, yet existing capacity remains sufficient to serve as a buffer during crises. Tony Knutson, Global Head of Thermal Coal Markets at consultancy Wood Mackenzie, stated that this shock affects more countries than the Russia-Ukraine war did—'it’s a larger disruption.' Countries facing insufficient natural gas supplies have no choice but to pull the coal lever. Fatih Birol, Executive Director of the International Energy Agency (IEA), likewise noted that high energy prices will prompt governments, industries, and households worldwide to seek alternatives—so upward pressure on coal consumption 'is not surprising.' Asia bears the brunt—India, Japan, and Bangladesh accelerate their pivot to coal Asia is the epicenter of this shockwave. Japan, South Korea, and Taiwan are all major global importers of liquefied natural gas (LNG), while simultaneously maintaining large fleets of coal-fired power plants—giving them both the capability and incentive to switch quickly. Japan has announced it will allow more coal plants to participate in its capacity auctions and expand the use of inefficient coal power; South Korea has also indicated it is considering relaxing restrictions on highly polluting power generation.

Has the Iran war unexpectedly accelerated global LNG capacity expansion—will supply oversupply arrive sooner than expected?

The closure of the Strait of Hormuz triggered by the Iran war is reshaping the long-term structure of the global liquefied natural gas (LNG) market in an unexpected way. The Strait of Hormuz blockade has abruptly reduced global LNG supply by roughly 20%. Asia’s benchmark LNG price—JKM—surged to about $30 per million British thermal units (MMBtu) in March this year, sharply up from under $11/MMBtu in February. Yet Bloomberg columnist Javier Blas points out that unless U.S.-Iran negotiations collapse and the Strait remains closed beyond July, LNG prices are likely to fall again—and remain low over the longer term. A deeper, structural shift is unfolding on both supply and demand sides: this crisis will drive Asian buyers to massively finance new LNG projects in North America, Africa, and Latin America, while simultaneously pushing some demand toward solar power and coal. According to data from the International Energy Agency (IEA), the global LNG industry approved new capacity totaling as much as 100 billion cubic meters last year—the highest ever recorded. With multiple factors converging, a buyer’s market is accelerating into formation. Short-term price shocks may not be as severe Although the Iran war’s impact on the LNG market is sharp, its intensity falls far short of the 2022 Russia-Ukraine conflict. JKM briefly hit ~$30/MMBtu in March this year, whereas in 2022 the same benchmark surged nearly eightfold, peaking near $70/MMBtu. The world’s largest LNG plant is currently offline; Qatari authorities say repairs will take at least three years. Meanwhile, the Strait of Hormuz blockade has directly cut off roughly 20% of global LNG supply—hitting price-sensitive importers such as India, Bangladesh, and Pakistan especially hard. At present, European importers are seizing this opportunity to accelerate inventory replenishment ahead of the 2026–2027 winter heating season. Stakeholders across the board are also adding safety stocks in anticipation of further escalation in Gulf tensions—providing short-term price support. But Blas believes this is merely the final buffer period before the arrival of a buyer’s market. 'Everything outside Hormuz will get built' The Strait of Hormuz blockade has fundamentally altered Asian policymakers’ assessment of energy security. Blas argues that no rational Asian decision-maker will regard this waterway as a reliable conduit going forward; reducing dependence on Qatar and the UAE has become a top strategic priority for every country. The market outcome of this logic can be succinctly summarized as: all LNG projects located outside the Strait of Hormuz will gain construction opportunities. Projects that seemed hopeless just 90 days ago will now receive financial backing from Asian buyers. LNG export projects across North America, Africa, and Latin America are thus poised for a construction boom. Meanwhile, Qatar will leverage its low-cost advantage to secure new buyers and pursue capacity expansion—though its expansion timeline may be delayed by six to eighteen months.

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Global gas market pricing prolonged tightness due to Iran war, IGU executive says

Global gas market pricing prolonged tightness due to Iran war, IGU executive says

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