Coal shipments have surged as countries scramble to replace disrupted oil and gas supplies from the Middle East. Despite the seasonal slowdown typically seen in April and May, coal became the largest cargo by volume for medium-sized vessels, with freight rates climbing 50% higher in May compared to February, according to Argus. Global coal imports in May are expected to exceed 464,000 tonnes—the third-highest monthly total on record.

The disruption at the Strait of Hormuz has accelerated this shift. Both Iran and the US are exerting control over the strategic chokepoint, forcing countries to source fuel from more stable regions. Asian economies that had been diversifying away from coal are now reversing course: Thailand restarted idle coal plants, while South Korea removed an 80% seasonal utilization cap and increased coal-fired generation by over 4GW in the war's first six weeks. Shipments to Japan, South Korea, and the EU jumped 27% year-on-year in April.

The energy shock has tightened an already constrained market. Indonesia, the world's largest coal exporter, imposed export restrictions in early April, while Chinese demand—driven by increased production at coal-to-chemicals plants—pushed Asia's benchmark prices to their highest level in over two years in March. Freight rates from Indonesia and Australia surged 60-75% and 40-50% respectively, with tighter fuel supplies adding further upward pressure on shipping costs.