Oil surge feared as Bangladesh faces supply risks from gulf
Global oil prices up 2%
Escalating hostilities involving Iran, the United States and Israel have triggered fresh concerns over Bangladesh's energy security, with economists and business leaders warning of potential fuel supply disruptions and sharp spikes in global energy prices.
Analysts said the latest US strikes on Iranian targets and Tehran's retaliatory attacks on American military bases across the Middle East could disrupt shipments of crude oil and liquefied natural gas (LNG) from Bangladesh's principal suppliers — Saudi Arabia, the United Arab Emirates and Qatar.
If the confrontation escalates or becomes prolonged, they cautioned, the economic fallout for Bangladesh could surpass the shock experienced during the Russia-Ukraine War, exposing the country to risks in fuel supply stability, foreign exchange reserves and inflation management.
Particular anxiety centres on the Strait of Hormuz, a critical maritime chokepoint through which roughly 40% of global oil and gas shipments pass. Bangladesh's imports of LNG, LPG and crude oil transit this route, meaning any disruption could immediately affect domestic energy availability.
Markets react to tensions
Energy markets have already reacted to rising tensions. Global oil prices increased by about 2% amid fears of military escalation, while international forecasts suggest crude prices could climb to $80 per barrel or higher, with some projections warning of prices reaching $110 if the conflict intensifies.
Azam J Chowdhury, chairman of East Coast Group, told TBS that retaliatory strikes across the Middle East could halt fuel loading operations at regional refineries, effectively suspending supplies of oil, gas, LNG and LPG.
He noted that Bangladesh lacks the capacity to refine crude oil sourced from alternative producers, making it dependent on Middle Eastern suppliers. In the event of prolonged disruption, the country may be forced to import refined fuel from the spot market at significantly higher prices, he warned.
Azam added that LNG shipments from Qatar could also face interruption following missile attacks in the region, warning that Bangladesh, which imports around 12 to 13 LNG cargoes monthly, could face serious economic consequences.
He urged the government to immediately secure alternative supply arrangements, including agreements with global suppliers such as Malaysia's Petronas, and increase imports of refined petroleum products from international markets.
Risks to industry and inflation
Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association, said rising fuel prices would increase electricity generation costs and worsen existing gas and power shortages, further disrupting industrial production.
Higher energy costs, he warned, would raise the cost of doing business, weaken export competitiveness and potentially fuel inflationary pressures that could trigger labour unrest across industrial sectors.
Centre for Policy Dialogue Executive Director Fahmida Khatun said supply disruptions would increase import costs and place additional strain on Bangladesh's foreign exchange reserves.
She stressed the urgency of identifying alternative fuel sources, noting that global commodity prices – including edible oil, sugar, wheat and fertiliser – could also rise as a result of the conflict.
Zahid Hussain, former lead economist at the World Bank's Dhaka Office, warned that continued conflict could destabilise global commodity markets, disrupt international shipping and logistics networks and heighten investment uncertainty.
He warned that Bangladesh could face three major risks – volatility in global commodity markets, disruptions to international trade and logistics, and heightened uncertainty discouraging investment decisions.
Energy expert Professor Shamsul Alam said higher global fuel prices would inevitably increase production costs across all sectors, pushing up commodity prices and placing additional pressure on consumers.
