By Craig Mellow
It would be nice to think that the soaring oil and gas prices spurred by the Iran War would redouble global efforts to switch to renewable energy sources. Markets tell a different story, so far: Coal is still king, or at least the easiest way to hedge against hydrocarbon disruption.
The price of benchmark Newcastle coal has jumped more than 10% since the U.S. and Israel started bombing Iran on Feb 28. The Range Global Coal exchange-traded fund has gained 7%, against 2% for the iShares Global Clean Energy ETF.
Coal, the carbon belcher of fossil fuels, still powers a third of the world's electricity, despite rapid expansion of renewables.
"Coal is quite sticky in the energy space," says Anthony Knutson, global head of thermal coal markets at consultant Wood Mackenzie. "It will continue to be important for the next decade or two."
None of that has much to do with U.S. President Donald Trump's vociferous enthusiasm for coal power. The top economy's coal consumption has dropped by two-thirds since a 2007 peak and now accounts for less than 5% of global demand, according to the International Energy Agency. Most of the rest goes to Asia.
Coal use inched down for the first time last year in China and India, the two consuming giants, but keeps rising elsewhere in the East Asian growth belt, says Noah Kaufman, a senior research scholar at Columbia University's Center on Global Energy Policy. "Coal is mostly a growth story in Asia," he notes.
Asia is also the top customer for liquefied natural gas from Qatar, which is now locked in by Iran's effective blockade of the Strait of Hormuz.
Taiwan is already "looking at restarting mothballed coal plants," Knutson says. Regional neighbors could follow suit if the LNG price spike lasts much longer. "LNG was seen as a somewhat stable alternative to coal," Kaufman observes. "Probably less so now."
Mining companies are still less than keen on investing in coal. Global capital expenditure on the mineral has plunged by two-thirds since 2010 to about $5 billion last year, says James Whiteside, Wood Mackenzie's head of corporate research.
Big diversified miners like BHP and Rio Tinto have shed heating coal assets, with one eye on demand projections and the other on investors who won't touch the most-polluting fuel on environmental, social, and governance grounds.
Leading the buyers' list have been Australian coal-focused pure plays like Yancoal and Whitehaven Coal. Both stocks are up by double digits since war came to the Persian Gulf.
Glencore, the No. 3 global miner, has bucked the trend, adding coal assets and leaning on the commodity as a major profit source. That helped scuttle its recent failed merger talks with Rio Tinto by "making the valuation tricky," Whiteside says.
In the medium term, global coal demand and supply look roughly in balance, Knutson says, though shortages may loom in the 2040s unless investment picks up in the next decade.
Two megatrends could affect that long-term calculus in opposite ways. China, which burns half the world's coal, might shift to solar and other renewables ahead of schedule, reducing demand. The rush to build artificial-intelligence data centers across the globe, on the other hand, will increase the hunger for power, and any fuel available.
"Data centers will need more of everything," Kaufman says. "Any claims that getting rid of coal would be easy have clearly been shown to be off base."
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 19, 2026 11:44 ET (15:44 GMT)
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