Global energy markets face severe disruption as the United States-Israel war on Iran restricts crucial supplies through the Strait of Hormuz. With oil and liquefied natural gas shipments severely impacted, countries worldwide and across Asia are falling back on coal, driving up prices and doubling half-year profits for South Africa’s Thungela Resources.
Strait of Hormuz Closures Spark Global Energy Crisis
Crude oil and natural gas supplies have faced worldwide disruption following the United States-Israel war on Iran. Soon after strikes on Tehran began on February 28, Iran closed the Strait of Hormuz, a critical waterway through which about one-fifth of the world’s oil and liquefied natural gas supplies were shipped during peacetime. Although negotiations to remain open or resume traffic are ongoing, the closure has reduced available supplies and caused oil prices to soar.
No region has felt the impact quite as acutely as Asia, which depends heavily on Gulf energy sources. According to data from the US Energy Information Administration, about 82 percent of oil and gas shipments passing through the Strait of Hormuz went to Asian destinations in 2022, with China, India, Japan, and South Korea topping the list.
The conflict has also directly damaged energy production infrastructure across the Middle East. In March, Qatar declared force majeure on its delivery contracts after Iranian drones struck its Ras Laffan oil facility—the world’s largest liquefied natural gas complex—forcing it offline. State officials reported that Iranian attacks had knocked out 17 percent of Qatar’s exports by March. Energy sites in the United Arab Emirates, including the Das Island terminal, the Fujairah oil terminal, and the Ruwais Refinery Complex, have also been targeted, alongside facilities in Oman and Saudi Arabia.
Asian Power Systems Turn Back to Coal
With gas supplies squeezed and oil prices climbing, nations are falling back on the most readily available and affordable alternative to keep power grids running. While coal prices have also risen, the fuel remains significantly cheaper than oil. An analysis by energy data company Ember projects that coal output will rise globally by 1.8 percent by the end of 2026 compared with 2025 under worst-case projections.
Governments that previously pledged to curb fossil fuel reliance are reversing course to protect their domestic energy security. Japan has lifted restrictions on older, high-emission coal plants to absorb energy shocks, while South Korea delayed the shutdown of coal-powered facilities originally promised for 2040. In South Asia, Bangladesh initially instituted rolling power cuts, closed universities, and rationed vehicle fuel before ramping up coal-fired generation. Thailand, the Philippines, and Vietnam have followed similar paths to preserve dwindling gas reserves.
Pakistan witnessed a drastic shift, with data from the National Electric Power Regulatory Authority showing a 90 percent increase in electricity generated from imported coal by July compared to the same period a year prior. Meanwhile, China and India—which already consume 70 percent of the world’s coal—are expanding operations. India plans several new mining projects to increase global supplies by 2.5 billion tonnes annually, driven partly by rising electricity demand from intense heatwaves. European nations have also adjusted timelines; Italy pushed back its coal phase-out from late 2025 to 2038, and Germany stated it will not jeopardize electricity generation for earlier climate promises.
Thungela Resources and Major Exporters Capitalize on Surging Profits
The sudden pivot toward coal has directly benefited major mining companies and exporting nations. Indonesia, which currently leads global coal exports by a wide margin alongside Australia and Russia, reversed previous plans in March to curb production and reduce oversupply. Jakarta shifted strategy to capitalize on soaring prices, which reached $131.85 per tonne in July, up significantly from $102.20 the previous year.
South Africa’s premier thermal coal producer, Thungela Resources, reported doubled profits for the first half of the year as international buyers scrambled for fuel. The company’s headline earnings per share climbed from 1.92 rand to 4.80 rand, underscoring how geopolitical conflict has reshaped balance sheets across the sector.
Long-Term Clean Energy Goals Face Near-Term Hurdles
The short-term reliance on high-emission fuels deals a setback to international climate goals. More than 40 countries pledged at COP26 to scale back coal use, though major consumers like India and China did not sign the agreement. Analysts note that nations lacking sufficient renewable energy capacity have little choice when gas supply chains fracture.
Energy transition analyst Nick Hedley with Zero Carbon Analytics observed that countries possessing existing coal infrastructure can easily revert to its use due to immediate cost advantages when gas prices surge, even though renewables remain the most cost-effective long-term solution.
Despite the current rebound, longer-term indicators show structural declines persisting elsewhere, including ongoing drops in European consumption and a dip in China’s domestic production following a deadly mine explosion. Whether the conflict permanently stalls the global transition or merely serves as a temporary detour depends on how quickly nations redirect capital toward domestic renewables and electrification to insulate themselves from future shocks.
