FX.co ★ Coal Retreats on Falling Oil Prices

Coal prices eased back toward $130 per ton after briefly spiking to $150 earlier in the week, as declining oil prices tempered concerns over a prolonged global energy supply crunch. Crude fell below $90 per barrel after the US and other major economies took steps to rein in energy costs. Even so, fighting in the Middle East continued with no clear resolution in sight, and the Strait of Hormuz remained effectively closed. At the same time, Qatar’s largest LNG export facility has suspended shipments for five consecutive days—the longest interruption since 2008—heightening the risk of renewed upward pressure on fuel prices. Disruptions in oil and gas supply typically boost demand for fuel switching in the power sector. Given the heavy reliance of many Asian economies on Qatari LNG, a protracted outage could force the region to increase coal-fired power generation. Coal is also gaining strategic importance for China, both as a buffer for energy security and as a critical feedstock for its chemical industry.