The conflict in the Persian Gulf has sparked a significant re-evaluation of global energy dependencies, sending shockwaves through commodities. As oil and liquefied natural gas markets face intense volatility following strikes on critical infrastructure, coal is emerging as a pragmatic beneficiary. Assets in the Range Global Coal Index ETF (COAL) doubled in March, propelled by a potent combination of strong investor inflows and robust price performance. COAL was up just over 11% in March and has gained about 60% over the last 12 months. 

This current crisis underscores a shifting hierarchy of needs for global policymakers. While climate negotiators have spent decades attempting to phase out coal, energy security, reliability, and affordability have rapidly moved to the forefront. When energy shocks threaten industrial productivity, emissions concerns frequently take a backseat to the immediate necessity of keeping the lights on.

Data suggests that coal remains less sensitive to geopolitical disruptions than other energy sources. Since the start of the conflict, European LNG prices have skyrocketed 67% through March 27. In contrast, the benchmark Australian coal price has seen a more tempered increase of 17%. Newcastle coal futures, a key benchmark for Asian power, reached their highest levels since 2024 earlier this month.

See more: Reports of Coal’s Death Have Been Greatly Exaggerated

This second major gas supply crunch in four years is forcing a tactical retreat to coal across both Europe and Asia. Japan has already announced plans to expand the use of less efficient coal plants to diversify its generation capabilities. Meanwhile, Germany is considering the reactivation of coal-fired plants to curb soaring electricity prices.

Despite long-term goals for a green transition, coal still provides over a quarter of the global energy supply. In fact, experts projected global coal demand to reach a new record high last year. For many emerging economies, the bridge fuel promise of natural gas has been undermined by price volatility. Consequently, coal’s role in the global energy mix appears increasingly prolonged as nations prioritize a diversified and dependable power supply.

VettaFi LLC (“VettaFi”) is the index provider for COAL, for which it receives an index licensing fee. However, COAL is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of COAL.

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