Japan reduced natural gas-fired power generation in favour of coal as LNG supply disruptions linked to geopolitical risk around the Strait of Hormuz constrained availability, Bloomberg Markets reported on 3 July 2026. Separate reporting from NewsAPI and Oilprice quantified the shift: Japan's LNG imports fell 7% while gas-fired generation declined 16% year-on-year in June, dropping to 17.3 TWh. Coal-fired generation rose 4.6% over the same period as utilities responded to elevated LNG prices.
LNG and coal are the primary commodities directly affected by this fuel-switching. Japan is one of the world's largest LNG importers, and a 7% import decline represents a material reduction in spot and contracted LNG demand. Coal demand from Japanese utilities increased as the direct substitute fuel, with generation volumes up 4.6%.
Oilprice noted that despite reporting improved energy flows through the Strait of Hormuz, elevated LNG prices continued to drive the substitution, indicating cost pressures rather than physical unavailability alone were sustaining the shift. Bloomberg Markets framed the development within the broader context of geopolitical risk at a critical global shipping chokepoint affecting energy supply chains.
Sources: Bloomberg Markets, NewsAPI, Oilprice