The Indonesian trade ministry’s decision to prioritize domestic supply creates a significant bottleneck for regional importers already reeling from global energy shifts. This policy change forces producers to guarantee local availability before clearing international shipments, effectively tightening the supply chain at a moment of extreme volatility.

Coal demand has surged as the ongoing conflict between Israel and Iran disrupts traditional oil and gas routes through the Persian Gulf. With Qatar’s Ras Laffan LNG complex sidelined following missile strikes, energy-hungry nations in Asia and the European Union have pivoted back to coal as a primary alternative. South Korea, in particular, saw coal-fired power generation climb by 40% in April, marking its sharpest increase since 2019. As buyers scramble to secure fuel, these Indonesian export restrictions are expected to sustain high price levels for the foreseeable future, leaving importers to compete for limited remaining alternatives.