Coal prices hit two-year high amid Iran conflict and rising gas costs
Coal prices have surged to their highest level in two years, rising 26% since the onset of the conflict in Iran to $133 per tonne. This price hike comes amid soaring gas prices, prompting European and Asian countries to seek additional energy supplies. Analyst Tom Price described this as the biggest shock to the coal market since Russia's invasion of Ukraine in 2022.
In response to rising gas prices, European nations have increased coal burning, pushing coal prices to record levels exceeding $400 per tonne. Although the Iran conflict does not directly affect global coal supply, it has driven up oil and gas prices, complicating liquefied natural gas (LNG) deliveries. Gas prices in Europe have jumped 53% since the start of hostilities, leading gas-fired power plants in Japan, South Korea, Taiwan, and the EU to switch to coal. Italy is even considering reopening coal-fired power plants to prevent blackouts and mitigate the impact of high gas prices and LNG supply shortages.
The high gas prices and increased coal dependency are expected to persist in the near term until the energy situation stabilizes or alternative energy sources become available.
