Oil at $120 per barrel could add Tk 61000cr annual burden

Bangladesh is facing a looming economic challenge as global oil prices are set to cross the critical threshold of US$120 per barrel amid escalating tensions in the Middle East.

A surge could impose an additional annual burden of Tk 61000 crore on the country’s economy, raising serious concerns about sustainability, industrial growth, and employment, a new study has found on Saturday.

The study, conducted by Change Initiative where the researchers revealed that every $10 increase in Brent crude oil prices per barrel translates into nearly $100 crore in extra annual expenditure for Bangladesh.

With the country importing about 95per cent of its energy needs, this dependency leaves the economy highly vulnerable to global market volatility, the study noted.

If prices remain above $120 for an extended period, the annual cost could balloon to $400-500, creating unprecedented fiscal pressure.

The small and medium enterprise (SME) sector, which accounts for 70-80 per cent of national employment and contributes 25-30 per cent to gross domestic product (GDP), is expected to be hit hardest. Rising fuel costs would increase production expenses, reduce competitiveness, and potentially trigger widespread job losses.

Analysts caution that prolonged subsidies are not a viable solution, and the government may eventually be forced to adjust energy prices, risking de-industrialization.

Chief researcher M. Zakir Hossain Khan emphasized that while the situation is dire, it also presents a chance for Bangladesh to accelerate its transition toward renewable energy.

He noted that countries such as China, India, and Vietnam have successfully invested in renewables to stabilize their industries, and Bangladesh must follow suit to safeguard its future.

The study revealed that rooftop solar installations in industrial zones could reduce operating costs by 30-50 per cent while cutting carbon emissions significantly.

In fact, utilizing just 10 per cent of unused space in industrial parks could generate 57 megawatts (MW) of solar power, reducing emissions by over 51,000 tons of carbon dioxide annually.

Expanding this to 20 per cent could double the capacity, further strengthening energy independence.
Sectors such as leather, plastics, packaging, and light engineering were identified as priority areas, with the potential to cut emissions by up to 49 per cent through targeted interventions.

The urgency is underscored by Bangladesh’s Nationally Determined Contribution (NDC) target, which aims to reduce 69.84 million tons of carbon dioxide emissions by 2035.

Achieving this goal will require immediate and decisive action to transform the energy landscape.
As global oil prices continue to climb, Bangladesh stands at a crossroads.

Failure to act could result in economic instability, job losses, and weakened industrial capacity.
But with bold investments in solar and other renewable sources, the country has the opportunity to not only mitigate the crisis but also position itself as a leader in sustainable industrial growth.