From Ukraine to Iran: War stirs fresh oil shock. Is Bangladesh ready for another inflation storm?
Global oil prices have surged past $100 a barrel for the first time since that invasion, threatening to unleash yet another inflation storm on an already strained economy.
For four years, Bangladesh has struggled to escape the inflation spiral unleashed by the Russian invasion of Ukraine in February 2022, a crisis that turned it into South Asia's highest-inflation economy.
Now another geopolitical shock is gathering force. On the tenth day of the US-Israel war on Iran, global oil prices have surged past $100 a barrel for the first time since that invasion, threatening to unleash yet another inflation storm on an already strained economy.
The uncomfortable irony is that the escalating war in the Middle East arrives just as a freshly elected government takes office and just as inflation had finally begun to slow.
Following a tightening monetary stance by the Bangladesh Bank, inflation had slipped below 9% – still high, but hinting that the long price surge might finally be losing momentum.
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The latest data from the Bangladesh Bureau of Statistics reveal just how uneasy the inflation landscape still is. Overall inflation climbed to 9.13% in February 2026, a ten-month high. Even more worrying, food inflation – the measure that defines everyday living costs – jumped to 9.30%, the highest in 13 months.
For ordinary households, the pain is becoming structural. Wage growth stood at 8.06%, marking the 48th consecutive month in which income growth has lagged behind inflation.
US crude oil, the front-month West Texas Intermediate futures soared 30% to hit $118.28 a barrel in Monday (9 March) trading hours, while Brent, the international benchmark, jumped more than 25% to $116.67 per barrel.
The surge comes as the escalating US-Israel war on Iran has fuelled fears of prolonged disruption to shipments through the Strait of Hormuz, which carries one-fifth of the world's daily oil supply, while the UAE and Kuwait have begun cutting oil production after the Strait blockage.
For Bangladesh, such shocks rarely remain distant geopolitical headlines. Even before oil crossed $100 per barrel, panic buying gripped petrol pumps, showing that government assurances and rationing did little to calm fears.
The country imports most of its fuel and fertiliser, so global oil spikes ripple through the economy: transport costs rise, electricity becomes more expensive, fertiliser and irrigation costs climb, shipping costs increase, and eventually the pressure spreads to food markets and consumer goods. In short, global oil shocks quietly reach domestic kitchens.
Bangladesh has faced this before. The Russian invasion of Ukraine sent fuel, fertiliser, and food prices sharply higher, pushing inflation above 9% and keeping it stubbornly elevated for years. Today, the macroeconomic environment is even more fragile.
Merchandise exports fell for the seventh consecutive month in February 2026, while private credit growth dipped to a record low of 6% in January. Even the General Economics Division (GED) of the Planning Commission could not look away – its February 2026 Monthly Economic Update & Outlook report highlighted that a revenue shortfall, combined with weak mid-year Annual Development Programme (ADP) utilisation, is creating mounting fiscal challenges.
The pressure on the taka is a particular concern. From Tk86 in February 2022 to crossing Tk100 in September 2022, it has now stood at Tk122.5 against the US dollar. With the US-Israel war on Iran driving energy costs ever higher, a further weakening of the taka could sharply push up import bills, electricity and fuel costs, and production expenses, sending the economic burden soaring across Bangladesh.
This also creates a difficult dilemma for monetary policy. With inflation already high, there is little room to loosen policy to stimulate growth. Yet tighter financial conditions risk slowing investment and employment.
Whether this becomes another full-scale inflation storm will depend largely on how long the war persists and whether global energy supply and routes stabilise. But the early signals from markets are unsettling.
Bangladesh is bracing for a storm it cannot fully control, and the coming months will test both policy resilience and the patience of ordinary citizens.
