Bangladesh may face energy crisis if the Middle East war prolonged
Concerns are growing about the Bangladesh’s energy security due to the ongoing war in the Middle East. But this situation could have been avoided if the country’s energy policy had not been import-dependent.
The vast majority of all fuel that is LNG, crude and refined oil is imported from the Middle Eastern and Gulf countries of Qatar, Saudi Arabia, the United Arab Emirates, and Oman.
As a result, issues such as geopolitical tensions, blockades of sea routes, or restrictions on the movement of ships transporting energy directly affect the country’s energy and power sectors.
In this context, it is conceivable that if the ongoing war between the US-Israel and Iran intensifies and the Strait of Hormuz is closed, it will disrupt the country’s energy supply chain. Such situations have been seen in the past as well.
The important thing to note in this case is that being an economically developed country, it was possible to import fuel at a higher price. But for a less developed country like Bangladesh, importing fuel at a higher price is beyond its capacity.
On the other hand, it also puts pressure on the economy. That is why, even if fuel is available on the international market, the dollar the crisis forced a reduction in LNG imports from the spot market.
The result was prolonged load shedding, reduced gas supplies to industry, and production disruptions. In other words, one of the reasons for the energy crisis was not a supply shortage, but a dollar crisis.
The question is, is there currently a dollar crisis in the country? The country’s economy is still under multifaceted pressure. In particular, paying off foreign debt and interest has become a major pressure. And this has to be paid in dollars.
The International Energy Agency (IEA) has mentioned in its World Energy Outlook 2025 report that Bangladesh will be the second largest LNG importer in South Asia by 2035. At that time, about 42-44 billion cubic meters of LNG will be purchased annually.
The concern is what will happen to the country’s energy sector if another global crisis occurs. The ongoing crisis in the Middle East has brought this reality to the fore once again.
If remittances decrease, pressure on foreign exchange reserves will also increase, and that pressure will ultimately fall on energy imports. As a result, Bangladesh may face a situation in the future, where energy is needed.
It will not be possible to import fuel due to the shortage of dollars. As a result, the country will face an energy crisis. However, an alternative to dependence has not yet been created.
