Iran Conflict Spurs Oil Spike, Coal Profits in Asia

Higher energy costs now reach households and factories across Asia after the closure of the Strait of Hormuz cut roughly one-fifth of global oil and LNG shipments. Oil prices have risen for four consecutive days, adding pressure to semiconductor supply chains and broader trade flows that depend on affordable Gulf crude.

The immediate trigger was Iran's decision to close the strait following the start of strikes on Tehran on February 28. Negotiations to reopen the waterway continue. In the meantime, countries that once planned to retire coal plants have extended their use because coal remains cheaper than imported gas at current prices.

South Africa's Thungela Resources reported doubled half-year profits, driven by a 38 percent production increase at its Australian Ensham mines and stronger demand at its domestic operations. Headline earnings per share rose to 4.80 rand from 1.92 rand a year earlier. Indonesia, the world's largest coal exporter, reversed earlier production curbs to capture prices that reached $131.85 per tonne in July, up from $102.20 the prior year.

Japan lifted limits on older coal units. South Korea postponed scheduled closures. Bangladesh, Thailand, the Philippines, Vietnam and Pakistan all increased coal-fired generation. India announced new mining projects expected to add 2.5 billion tonnes of annual supply. Germany and Italy also delayed phase-out timelines.

Global coal output is projected to rise 1.8 percent by the end of 2026 in a worst-case scenario, according to Ember. At the same time, China's domestic production fell after a May mine explosion killed 82 people, and several European countries continue long-term declines in coal use. Analysts note that the surge partly reflects pre-existing 2025 demand growth from data centers and heatwaves rather than substitution alone.

The episode has left countries with large coal fleets better positioned than those reliant on spot gas markets, yet it has also underscored the absence of sufficient renewable capacity to absorb sudden supply shocks.