Forecasters from the majority of major meteorological organizations anticipate that the globe will soon be impacted by a significant weather event: El Niño. This development is set to influence global temperatures and precipitation patterns, subsequently causing shifts in the consumption of coal and natural gas across vital regions.
El Niño invariably brings complications. Considering the repercussions of the Strait of Hormuz blockade and damage to energy infrastructure in the Middle East, this pattern could further exacerbate difficulties across key energy sectors come this summer.
A detailed assessment of the situation is provided by Reuters correspondent Gavin Maguire.
The Pacific Ocean is Warming Up
El Niño is a climatic pattern characterized by warmer sea surface temperatures in the central and eastern Pacific Ocean. It frequently results in severe heatwaves across Asia, alongside floods and colder conditions in other territories.
According to the World Meteorological Organization (WMO), there is a rapid escalation in water temperatures across the equatorial Pacific.
“Climatic models currently show a high degree of consensus. There is significant confidence that an El Niño event is imminent, followed by its intensification over the coming months,” warned the head of the WMO’s Climate Prediction Centre.
The Pacific Ocean’s surface temperature recently surpassed 21°C, marking one of the highest readings recorded since the early 1980s.
Given that global sea surface temperatures generally fluctuate slowly, the sharp increase seen since early 2026, relative to the long-term average for this time of year, signals the intensification of El Niño.
Good Tidings for Coal Exporters
Historically, El Niño has corresponded with above-average temperatures across much of Asia and Oceania. This specific phenomenon has been known to trigger intense and protracted heatwaves in South Asia due to its negative impact on monsoon rainfall.
Ember, an analytical think tank, estimates that Asia—which accounts for roughly 53% of the world’s electricity demand—will experience rising demand for cooling systems this summer.
This presents positive prospects for coal exporters, as Asia’s electricity generation relies heavily on this fuel. Coal power plants supply about 70% of the electricity in India and 55% in both China and Asia overall.
Image generated by AI. © Collage / Ridus.ru
Indonesia stands as the principal coal supplier in the region. In 2026, its total coal exports to Asian nations saw a decrease of about 7% compared to 2025, attributed to the growing share of renewables in power generation and reduced energy consumption by key industries such as cement manufacturing.
As El Niño strengthens and air conditioning usage rises across Asia, the aggregate demand for coal and its import volumes are expected to increase.
LNG in Motion
Since Asia is the foremost consumer of liquefied natural gas (LNG), exporters in this sector can anticipate a surge in orders from the area as temperatures climb. However, growth in this specific segment is forecast to be less pronounced, as LNG usage in Asia is more concentrated within industrial sectors than in power generation.
Following reductions in Qatari LNG shipments and damage sustained by Qatari liquefaction plants, Asian LNG prices surged from $550 per metric ton just before the start of the US-Iran conflict to their current level of $868 per ton, as reported by LSEG.
The recent curtailment of Qatari LNG supplies has caused a sharp spike in Asian LNG prices. These prices have significantly surpassed local coal equivalents (roughly $104 per ton for Indonesian coal and about $126 per ton for Australian coal). This suggests that for power utilities, LNG could become prohibitively expensive when benchmarked against coal.
European energy firms typically exhibit less price sensitivity than their Asian counterparts, especially during periods of power scarcity.
Extensive areas of Southern Europe, including Spain and Italy, are susceptible to intense heatwaves during El Niño years. This frequently sparks a sharp uptick in electricity demand for air conditioning, straining power grids and inflating regional electricity costs.
Any prolonged heat spells in 2026 could provoke a rush for LNG imports, particularly in Italy, where nearly half of all electricity generation still depends on gas-fired power plants.
The Americas, Africa, and the Middle East
In contrast to Asia, where El Niño typically brings warmer weather, the phenomenon has historically resulted in cooler-than-average summer temperatures across North America. As North America usually experiences its peak electricity demand during the summer months, lower temperatures in 2026 might translate to a reduction in overall power consumption and decreased output from gas-fired power stations.
A drop in gas consumption within North America could free up more gas for LNG export. Interest from key European markets is expected to persist due to the necessity of replenishing gas storage, alongside demand from other regions.
Reduced US power generation this summer could lead to an increase in coal exports from the United States, especially if coal demand remains steady across South Asia and parts of Africa.
In Latin America and Africa, El Niño-induced shifts in rainfall patterns may cause a decline in electricity output from hydropower plants, which supply a substantial portion of the total power generation in both regions.
To offset prolonged hydropower deficits, energy providers in Latin America and Africa commonly boost their utilization of alternative generation methods, including renewables and gas power plants.
In the Middle East, the temperature increases associated with El Niño typically boost demand for gas-generated electricity throughout the summer. This could constrain the region’s capacity to restart exports toward the end of 2026 following the potential conclusion of a peace agreement with Iran.
Although Asian nations may bear the brunt of an intense El Niño in 2026, all major energy markets are vulnerable to the influence of any sustained changes in global weather conditions.
As global energy systems remain strained due to the US-Iran conflict, key fuels like coal and natural gas could face even greater pressure and price volatility if El Niño delivers heatwaves and consumption spikes, mirroring patterns from previous years.
About the Author
