Iran–Israel tensions fuel energy shock concerns for Bangladesh

Staff Reporter :

Global energy markets are on edge as escalating hostilities involving Iran and Israel—following coordinated strikes by the United States and Israel—prompted retaliatory missile and drone attacks across the Middle East, including on Israeli territory and US bases.

The flare-up has renewed fears of a wider regional conflict with serious implications for energy supplies.
Analysts caution that any escalation could disrupt oil and gas flows through the Strait of Hormuz, a critical corridor carrying roughly one-fifth of global oil shipments.

With the passage now viewed as high risk, markets are pricing in potential supply interruptions.
Crude prices have already been rising amid geopolitical strain, gaining more than 2 percent on Friday and climbing to around $67 a barrel from $61 in mid-February.

Why Bangladesh is exposed
For Bangladesh, the Hormuz route is pivotal rather than peripheral. Nearly 90 percent of its primary energy imports—crude oil, refined fuels and LNG—transit this narrow waterway.

The country depends heavily on Gulf suppliers such as Saudi Arabia, Qatar and the United Arab Emirates, leaving it particularly vulnerable to disruptions in the region.

Any shipping delays, spikes in war-risk insurance, or physical blockage of the strait would have immediate repercussions for Bangladesh’s energy security.
Economic risks ahead
A sustained rise in oil prices would swell the import bill and strain foreign exchange reserves. State-owned energy firms could face mounting subsidy pressures unless domestic prices are adjusted.

Higher LNG and fuel oil costs would also push up power generation expenses, weighing on industrial output and export competitiveness—especially in energy-intensive sectors—and potentially stoking inflation via higher transport and production costs.

While Bangladesh aims to diversify energy sources through renewables and alternative LNG procurement over the long term, analysts note these shifts will take time and significant investment, leaving the economy exposed in the near term to Gulf supply shocks.