October 12, 2026 - Liquefied natural gas flows from the Persian Gulf are still over 75% lower than they were before February 28th. Yet heating demand is rising ahead of winter. In Europe, the November natural gas benchmark contract is trading at over 81 euros per MWh. In Asia, the spot market LNG price topped prices for Europe, drawing cargoes eastward. Meanwhile, coal is 80% cheaper than LNG.

Coal has been the target of much climate-related regulation on the basis that it emits the most carbon dioxide plus pollutant gases and particulate matter. Yet coal has remained a fixture of the global energy system because of its affordability, availability, and reliability. Even so, global oil exports have recently been on the decline, driven lower by the abovementioned regulation, which has made it more expensive to generate electricity from coal in many parts of the world—but then the U.S. and Israel attacked Iran, starting a war that has wreaked havoc on gas trade.

In September, the International Energy Agency said it expected demand for coal this year to rise to an all-time high—despite the net-zero push that the IEA is very much in favor of, despite the surge in LNG export and import capacity, and despite the closure of many coal power plants in Europe and North America. Coal-buying is set for an especially strong fourth quarter of the year, as peak demand season begins.

Until this month, coal exports globally were on track for an annual decline, Reuters’ Gavin Maguire wrote last week, but the current quarter could change this. In fact, it is almost certain the current quarter will change this: Australian thermal coal is trading at a discount of 80% to LNG for delivery in Asia, where the spot price for November cargoes topped $26 per million British thermal units, up from$25.25 per mmBtu earlier this week.

“Asian demand remains price-sensitive, with Chinese buyers particularly unlikely to chase spot cargoes unless prices mean revert, and that is currently unlikely,” Davenport Energy managing partner Toby Copson told Reuters earlier this month.

The reason this is not likely to change is that LNG cargoes out of the Strait of Hormuz are still much fewer than they were before the war started. While tanker-tracking outlets report an improvement in LNG flows out of the Middle East in September, even improved, the flows are much lower than pre-war averages.

In September, 21 LNG cargoes are estimated to have exited the Strait of Hormuz, the highest monthly number since the Iran war began, yet down from over 60 before the war, shipping data compiled by Reuters and released earlier in October. The reason, besides the extended force majeure that QatarEnergy has in place for its LNG industry, is the increased frequency of tanker attacks in the waterway. Over the last two weeks alone, there have been as many as 20 attacks on vessels in the Persian Gulf, most of them tankers, including LNG carriers.

Coal, meanwhile, is not anyone’s target. Australian benchmark coal is trading at the equivalent of $5.40 per mmBtu, which would make any government reconsider its energy transition plans favoring liquefied natural gas, which is trading at $26 per mmBtu—as long as that government has not shut down its coal power plants, of course.

This is especially true of the world’s biggest energy importers, namely Japan, South Korea, and China. Reuters’ Maguire reports, citing Kpler data, that these three imported a collective 122 million tons of coal during the third quarter of this year. Third-quarter demand for coal is driven by summer heat and cooling demand, but heating demand trumps that: Japan, China, and South Korea were importing coal at a rate of 143 million tons per quarter in both the last three months of 2024 and of 2025—and that was before the war.

Yet coal imports are also rising in the most anti-coal part of the world: Europe. With the war driving gas prices to highs last seen in 2022, and with the European Union reducing its choice of suppliers with its ban on Russian energy commodity imports, coal imports into the bloc that covers most of the continent have risen strongly this year, with the June total, for instance, up by 43% on the year.

It was at this point in time that the world’s largest coal exporter, Indonesia, decided to pursue production quotas and policy tweaks in coal that saw its exports drop by as much as 23% in August. The IEA expects the country’s coal production to decline this year by over 12 million tons, citing lower production quotas and political discussions about revenue-sharing arrangements with mine operators and the possibility of moving export control to a single state-owned entity. This could drive coal prices higher during peak demand season, but here’s the thing: coal prices are quite unlikely to ever come close to LNG prices.