Global Coal Demand Hits Record as Hormuz Crisis Boosts Bakken Oil Appeal

Global energy market disruptions caused by the closure of the Strait of Hormuz are pushing coal demand to a record high, a dynamic that indirectly supports demand for Bakken crude oil, according to a new International Energy Agency (IEA) report. The IEA predicted global coal consumption will rise 1.2% in 2026 to a record 8.94 billion metric tonnes, driven by countries turning to coal to fill gaps left by constrained oil and gas trade.

The IEA stated that "tighter natural gas supply has pushed up prices, prompting some electricity systems to switch from gas to coal." According to the agency, the conflict and trade restrictions have driven up oil and gas prices in recent months, leading to severe global energy disruptions. Countries including Japan, India, China, and some in Europe have increased coal use for power and, in China's case, for chemical production due to high oil prices.

While coal shipments do not pass through Hormuz, the resulting high natural gas prices are causing fuel switching. For Bakken producers, sustained high global oil prices amid these supply constraints improve the economics of continued production in North Dakota. The IEA noted demand from the world's top two coal consumers, China and India, is expected to rise 1% and 4.2% respectively this year.

Separately, China's rapid expansion as a future nuclear energy leader presents a long-term strategic shift in global energy markets. Analyst Damien Ma of Gavekal Technologies stated, "By a wide margin, China will have the world’s most dynamic and significant nuclear industry through 2035." China added 34 gigawatts of nuclear capacity in the last decade, compared to one new plant in the United States.

This build-out is part of Beijing's bid to become a dominant "electrostate." The Center for Strategic and International Studies reported that nuclear energy underpins strategic priorities for China "in the context of not only energy security but also technological innovation and global engagement." While this represents competition in the long-term energy technology landscape, the near-term reality for global oil markets—and thus Bakken crude—is defined by the current Hormuz-induced volatility and high prices.

The outlook for 2027 remains uncertain, the IEA said, hinging on the unpredictability of trade through the Strait of Hormuz. A recovery in LNG flows could lower natural gas prices and shift consumption away from coal, but continued restrictions would likely keep overall energy demand and prices elevated.