Hormuz shock: Bangladesh exposed as fossil fuel dependence deepens energy vulnerability, report says

When the Strait of Hormuz closed in late February, Bangladesh was 4,000 kilometres from the missiles. Yet nowhere has the ripple been felt more immediately.

A major new report by the Energy Transitions Commission (ETC) titled "Lessons on Energy Security after the Hormuz Crisis", released today (15 May) warns that what Bangladesh is experiencing is not an anomaly but a preview.

It argues that global dependence on concentrated fossil fuel chokepoints has created a structurally vulnerable system, and that only a rapid shift to clean energy can provide lasting resilience.

"The impacts are being felt across all regions," it states, "but most acutely in emerging and import-dependent economies," including Bangladesh, Pakistan, Sri Lanka and the Philippines, as oil tops $100 per barrel and LNG trades at double pre-crisis levels.

The crisis has quickly translated into daily disruption. Universities shut, restaurant menus shrink, farmers skip fertiliser use, factories ration energy, and LPG cylinders, vital for millions of households, become scarce symbols of fragility.

Bangladesh, which imports nearly all fossil fuels and has virtually no strategic reserves, is especially exposed.

Energy Transitions Commission Co-Chair Jules Kortenhorst said the world has built an "insecure and volatile" energy system, where most populations rely on fuels they do not control and markets they do not influence.

Unprecedented shock

The Strait closure disrupted 18.4 million barrels per day of oil, about one-fifth of global supply, and 110 billion cubic metres of LNG, roughly 20% of global trade.

Fertiliser supply chains were also hit, with a third of global inputs passing through Hormuz.

The IEA estimates global oil supply fell by 8 million barrels per day in March, nearly double the peak loss of the 1973 Arab embargo.

Brent crude surged from about $70 to $90–$120 per barrel, while Asian LNG prices more than doubled. Electricity prices rose in tandem as gas continued to set marginal power costs.

Unlike past crises, the report stresses this comes at a moment when scalable clean alternatives already exist across all major energy uses.

The resilience of clean systems

The ETC argues fossil systems are fragile because they rely on continuous fuel flows, while clean energy systems depend on one-off capital assets, solar panels, wind turbines and batteries, that deliver decades of output once built.

Adair Turner, co-chair of the ETC, said fossil dependence is now both a climate and strategic vulnerability.

In clean systems, 70–90% of costs are upfront, meaning price shocks affect only a small fraction of operating costs rather than the entire system, she said.

The world spends around $4 trillion annually on fossil fuels, and sustained price spikes from the crisis could add a further $1–2 trillion in costs this year alone, comparable to the global annual investment gap needed for net zero, Adair added.

Win-wins and trade-offs

The report highlights five key "win-win" responses. Scaling renewables, electrifying transport and cooking, improving energy productivity, and expanding green fuels and fertilisers.

Early signals are visible. Chinese solar exports doubled month-on-month, EU EV sales rose nearly 50%, and induction cooker sales in India jumped up to 30-fold as LPG prices surged.

For Bangladesh and similar economies, the lesson is direct.

Pakistan's recent solar boom has softened its exposure to fossil shocks, and the same pathway is available elsewhere.

However, the ETC warns against missteps. Temporary increases in coal use may be unavoidable in the short term in countries like Japan, South Korea, India and Bangladesh, but governments should avoid new coal investments or delays in phase-out plans.

Broad fossil fuel subsidies risk slowing clean energy uptake, while new LNG infrastructure could lock countries into future overcapacity, something the IEA already expects by 2030.