Gulf LNG Crisis Sparks Asia's Coal Revival, Goldman Warns of 'Second, Very Large Energy Shock'

A second major energy shock is unfolding, with the Gulf LNG crisis poised to trigger a resurgence of coal across Asia. Goldman Sachs commodities expert Samantha Dart warns this is a 'second, very large energy supply shock,' following the initial disruption from Russia's invasion of Ukraine. The immediate fallout is clear: power grid operators are being forced to switch back to the dirtiest fuel to keep electricity affordable, directly undermining global decarbonization efforts.

The crisis, centered on the Gulf, is now making Asia ground zero for the energy crunch. The shockwaves are expected to ripple globally, eventually impacting the U.S. market. According to Dart, the strategic calculus for Asian nations is shifting; the repeated instability may lead them to 'rely more on coal for longer' as a baseload fuel while simultaneously attempting to accelerate renewable build-out to reduce long-term exposure to volatile natural gas markets.

This pivot signals a profound setback for climate goals and a potential long-term re-entrenchment of coal in the world's fastest-growing energy region. The crisis pressures national energy strategies, forcing a brutal trade-off between affordability, security, and emissions. The move back to coal, even if temporary, risks locking in higher-carbon infrastructure and delaying the energy transition, with JPMorgan analysis highlighting Asia's emergence as the epicenter of this fossil fuel reversal.