Consumers unlikely to get relief from oil price drop soon

International oil prices have fallen sharply amid signs of easing tensions between the United States and Iran, but consumers in Bangladesh are unlikely to see immediate relief at the pump as the government continues prioritising the recovery of subsidy costs accumulated during recent market volatility.

The international benchmark Brent crude, which is used to price refined petroleum products, stood at around $72.48 per barrel on 27 February, just before the Iran conflict escalated. It surged during the conflict, reaching a peak of $112 per barrel on 18 May – an increase of 54.5% from pre-war levels.

Since then, prices have retreated sharply. Brent was trading at $83.19 per barrel yesterday (15 June), down 4.74% in a single session amid reports of progress in potential US-Iran negotiations. The benchmark has now fallen 25.7% from its May peak, though it remains 14.8% higher than pre-conflict levels.

Despite the correction in global markets, Energy Division officials say domestic fuel prices are unlikely to be reduced in the near term.

"Oil prices are falling in the international market but are still higher than the pre-war level, which continues to require substantial subsidy support for diesel," said Monir Hossain Chowdhury, Joint Secretary (Operations Wing) of the Energy Division. He added that diesel still requires a subsidy of about Tk50 per litre.

"We are monitoring the global fuel market closely. Future decisions on price adjustments will depend on market movements, as discussions on the Iran issue are still ongoing," he said.

Officials estimate that fuel subsidies in FY2025-26 could reach around Tk5,000 crore, largely to keep diesel prices below cost. Petrol, octane and other petroleum products are currently priced largely in line with international markets and do not require subsidy support.

Middle Eastern crude benchmarks see steeper decline

The decline has been steeper in Middle Eastern crude benchmarks used for Asian pricing.
Murban crude, produced in the United Arab Emirates, fell from $110.04 per barrel on 18 May to $77.31 yesterday, a 29.7% drop. 

Arab Light crude, used by Bangladesh Petroleum Corporation for refining at Eastern Refinery, declined from $119.09 to $87.75 over the same period, down 26.3%.

Prices were raised as global oil surged 

Domestic fuel prices were previously raised on 18 April, when global markets spiked amid fears of supply disruption following the US-Israeli attack on Iran. At that time, Brent crude closed at $91.87 per barrel – already 26.8% higher than the pre-war level.

Diesel was increased to Tk115 per litre from Tk100, octane to Tk140 from Tk120, petrol to Tk135 from Tk116, and kerosene to Tk130 from Tk112. A second adjustment on 31 May added Tk5 per litre to octane, petrol and kerosene, taking them to Tk145, Tk140 and Tk135 respectively.

Energy expert M Tamim said declines in global prices do not always translate into lower transport or commodity costs domestically. "Price reductions during downward cycles rarely reach consumers, as bus fares and freight charges do not adjust accordingly. That is why there is limited pressure to reduce fuel prices," he said.

He added that stronger monitoring in the transport sector would be needed to ensure that any future reductions in fuel prices benefit consumers.