Bangladesh seeks buffer against global oil disruption

As the conflict in the Middle East enters its sixth week, Bangladesh is adjusting its diplomatic approach to secure alternative energy supplies and shield its economy from a worsening global oil situation.

Traditionally dependent on Middle Eastern crude, the government has initiated an intensive “energy diplomacy” effort, engaging with Russia, India and several Central Asian countries to maintain fuel security. The urgency of this shift is heightened by uncertainty surrounding the Strait of Hormuz, a key maritime route for global oil shipments.

Although Iran has recently permitted six Bangladeshi vessels to pass through the route following high-level diplomatic engagement, the broader instability has prompted Dhaka to diversify its supply sources.

A notable development in this effort came when the United States granted Bangladesh a temporary waiver to import Russian oil.

According to officials from the Energy and Mineral Resources Division, the waiver took effect on 11 April and will remain valid until 9 June. The decision followed sustained diplomatic efforts in Washington, aimed at easing domestic energy pressures.

Foreign Minister Dr Khalilur Rahman played a central role in the discussions, including a meeting with US Energy Secretary Chris Wright. During the talks, he highlighted Bangladesh’s need to ensure uninterrupted fuel supplies, particularly for farmers during the critical planting season.

He also noted that Bangladesh had previously been unable to utilise similar global waivers due to the absence of suitable tanker arrangements.

However, importing Russian oil presents technical challenges. Bangladesh’s Eastern Refinery is designed to process light crude, typically sourced from Saudi Arabia and Kuwait.

Energy specialists indicate that Russia would need to supply a compatible grade of light crude. If this proves impractical, the government is considering refining Russian crude in a third country before import.

India has emerged as a significant partner in Bangladesh’s evolving energy strategy.

The two countries are connected through the 131-kilometre Indo-Bangla Friendship Pipeline, linking the Siliguri Marketing Terminal in West Bengal to the Parbatipur depot in Dinajpur. This pipeline enables efficient and cost-effective diesel transport.

Recent deliveries underline this cooperation, with India supplying 17,000 tonnes of diesel in three phases and a further 25,000 tonnes expected this month. Dr Rahman also met India’s Minister for Petroleum and Natural Gas, Hardeep Singh Puri, in Delhi to explore long-term supply arrangements.
Bangladesh has also expanded its outreach to Central Asian and CIS countries.

Ambassador to Russia Md Nazrul Islam, who is concurrently accredited to Kazakhstan and Belarus, has been leading these initiatives. He recently held discussions with Kazakhstan’s President Kassym-Jomart Tokayev and Energy Minister Erlan Akkenzhenov on government-to-government oil imports. Similar talks were conducted with Belarusian President Alexander Lukashenko.

In Southeast Asia, Singapore has already supplied 11,000 tonnes of jet fuel, with further diesel shipments in progress. State Minister for Foreign Affairs Shama Obayed said that “fruitful discussions” have also taken place with Malaysia and Indonesia as part of efforts to broaden energy sourcing.

Despite these diplomatic efforts, analysts caution that diversification alone may not fully protect the economy from global shocks.

Associate Professor Md Obaidul Haque of the Department of International Relations stressed the need for a multi-dimensional strategy, stating: “To meet the demand for fuel oil, the government must think of alternatives. Multi-dimensional steps are needed. The problem cannot be solved from a single-minded source.”

International analyst Major (Retd) Emdadul Islam emphasised the importance of transparency, noting that while there is no immediate shortage, “it is necessary for the government to clearly state that we also have an energy crisis” so that the public can prepare.

The financial implications are substantial. Finance Minister Amir Khasru Mahmud Chowdhury recently indicated that rising global energy prices have significantly increased subsidy requirements.

The government expects to spend approximately Tk 36,000 crore in additional subsidies for oil and LNG imports between March and June of the current fiscal year.

Some experts have proposed domestic measures to manage demand. Energy expert Professor Dr Ijaz Hossain suggested reducing petroleum consumption by 20 per cent. He argued that conventional steps such as shorter office hours are insufficient and proposed more substantial measures, including extending weekly holidays to three days to reduce energy use in transport and operations.

Until the situation in the Middle East stabilises, Bangladesh’s energy security will remain dependent on a combination of diplomatic engagement, technical adaptation and economic management. While the US waiver for Russian oil and closer cooperation with India offer temporary relief, officials acknowledge that sustained efforts are required.
As noted by State Minister Shama Obayed, the Ministry of Foreign Affairs is working to ensure that when one supply source is disrupted, alternative channels are ready. For a country prioritising food security and agricultural output, securing reliable energy supplies remains a matter of both economic stability and national resilience.