Oil reserves are shrinking, coal makes a comeback

Oil is falling slightly in price because of renewed hope for a peace agreement in Iran. According to the head of the International Energy Agency, it is a matter of weeks before commercial oil reserves are empty. In the current energy crisis, we are seeing a trend: where decarbonization first dominated, there is now a growing global demand for coal. Energy security is central to this. The oil price shows an erratic pattern. Since the beginning of this week, a decline has therefore been visible, but compared with last Tuesday 12 May, oil has risen in price from $107.77 to $110.93 per barrel at the time of writing (Tuesday afternoon 19 May). The recent decline has started because there is renewed hope for a peace agreement between the US and Iran. Trump says that he has called off a military attack on Iran planned for today at the request of several Gulf states. This is because an agreement would be imminent. He stresses that Iran must not have nuclear weapons. He announces that he will still launch a large-scale attack if no deal is reached. Meanwhile, Iran has sent a counterproposal to the American proposal to end the war. The contents are not yet known, but earlier Iran demanded an end to the attacks on Lebanon by Israel, lifting of the blockade of Iranian ports by the Americans, an end to the sanctions against Iran and compensation for war damage. According to Iranian media, Trump has offered to temporarily lift the sanctions on Iranian oil. The diesel price is also higher than last week. Now €173.05 per 100 liters from 4,000 liters (LTO member price) must be paid, while a week ago that was €169.30. Oil reserves are running out quickly More than ten weeks after the start of the war in the Middle East, the disruption of oil transport through the Strait of Hormuz is causing global oil reserves to shrink at a record pace, the International Energy Agency IEA reports in its May report. Several media report that IEA head Fatih Birol said on Monday that it is only a matter of weeks before commercial oil reserves are depleted. He stressed that the extra 2.5 million barrels per day added from strategic oil reserves is not infinite. According to him, the start of the planting season and the peak holiday season will cause an acceleration in the depletion of reserves due to higher demand for diesel, fertilizer, kerosene and gasoline, Reuters reports. Physical shortages are however unlikely in Europe according to a recent report by Rabobank. If the closure of the Strait of Hormuz remains limited to a total of three months, after which oil exports via this strait gradually resume in the following five months, European stocks of all major oil products are according to our simulation sufficiently large to cover consumption – even with unchanged domestic demand. If the blockade of the Strait of Hormuz lasts longer, especially the use of kerosene must decline more strongly to prevent reserves from running out according to the report. The bank also foresees bottlenecks for naphtha and fuel oil. The gas price has also risen further over the past week. On Tuesday 12 May, gas on the TTF cost €46.68 per MWh. At the time of writing (Tuesday afternoon 19 May), the price is €50.95 per MWh. That is an increase of more than 9%. The poor availability of gas and the high prices are meanwhile causing a renewed popularity of coal. The blockade of the Strait of Hormuz has led to more coal being transported. This was brought up last month by various participants in a panel discussion at the bulk shipping conference Geneva Dry. According to Burak Cetinok, head researcher at broker Arrow, global coal volumes fell by about 4% in 2025, or 60 million tons. The number of ton-kilometers fell more sharply, by 10%. That trend has now reversed. Cetinok: We are witnessing an energy crisis. Demand for coal is rising and I think we are only at the beginning. Arrow estimates that demand for coal due to the conflict in the Middle East could increase by 55 to 65 million tons, the equivalent of about 100 capesize ships. In China, despite the rise of renewable energy, coal still accounts for 60% of electricity production. Countries such as Japan, Vietnam, Thailand, South Korea and Taiwan are increasing production and/or bringing coal-fired power plants back into use. The Asian countries are heavily affected by disruptions in LNG supplies because they mainly import it from Qatar. About 20% of globally traded LNG usually passes through the Strait of Hormuz, but 90% of that goes to Asia. 'Coal-fired power plant phase-out plans have become unrealistic' In Europe, gas imports are more diversified, with Norway and the US as the largest suppliers. Nevertheless, due to energy security, several European countries are considering extending the lifespan of coal-fired power plants. For example, Germany's goal is to have all coal-fired power plants in the country closed by 2038 at the latest, but the country is now considering restarting decommissioned coal-fired power plants. German Chancellor Friedrich Merz said on Friday: I am not willing to put our industry at risk because we have phase-out plans that have become unrealistic. Italy has postponed the closure of coal-fired power plants until 2038. In the Netherlands, the current four coal-fired power plants must stop by 2030 at the latest, while at times when little wind and solar energy is generated they account for 15% of the energy supply. Also in the Netherlands, voices in politics are calling to keep the coal-fired power plants open longer. Coal prices are rising too Due to the resurgence in demand for coal, its prices are also rising. The Wall Street Journal reports that spot prices for coal loaded at the port of Australian Newcastle (a major supplier for Asia) have risen by 12% since the start of the Iran war. In March there was a temporary peak of $140 per ton. Still nowhere near as high as after the Russian invasion of Ukraine in 2022, when the price was $440 per ton. On the ICE futures exchange, the June 2026 contract, which currently sees the most trading, stands at $138 per ton at the time of writing. The daily average for electricity on the Epex Spot was quite high over the past week. The lowest average was €77.19 per MWh on 16 May, while on 18 May €136.09 per MWh was on the board.