As geopolitical tensions in the Middle East escalate dramatically, Bangladesh’s business community is bracing for significant fallout. The situation turned more volatile after the United States launched airstrikes on Iran’s nuclear facilities yesterday, prompting Tehran to retaliate with threats to attack U.S. naval forces and shut down the Strait of Hormuz, a critical maritime passage through which nearly one-fifth of global oil supply is transported.
Though Bangladesh is geographically distant from the conflict and maintains limited direct trade with Iran or Israel, the indirect economic repercussions are expected to be widespread, touching everything from energy imports, supply chains, transportation costs, export demand, and foreign exchange markets, to domestic inflation. Business leaders and economists alike are expressing deep concerns about the potential impacts on the country’s economy.
Business Community in Panic Mode: Speaking to Bangladesh Pratidin, several leading business figures emphasized the mounting anxiety in the private sector over the unfolding crisis. Shawkat Aziz Russell, President of the Bangladesh Textile Mills Association (BTMA), said, “War is never good for business. It disrupts supply chains, increases costs, and damages global buyer confidence. We sincerely hope this tension de-escalates.” Russell pointed out that even though Bangladesh does not directly trade much with Iran or Israel, the country is deeply linked to global supply networks. Any prolonged disruption in the Middle East would result in cascading effects throughout the global economy-Bangladesh included.
Fazlul Haque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), echoed similar fears: “The Middle East is critical to the global economy. Disruptions there impact oil prices, freight costs, and even air traffic. We are already seeing delays in shipping and rising prices. If this situation continues, we could see a 30-35% increase in export logistics costs alone.”
Strait of Hormuz Closure: A Nightmare Scenario: At the center of global concern is the Strait of Hormuz, a narrow waterway between Iran and Oman, through which nearly 21 million barrels of oil pass daily. Iran’s threat to block this strategic route is being taken seriously by global markets and policy analysts. For Bangladesh, which imports most of its liquefied natural gas (LNG) and petroleum products from Qatar, Oman, and Saudi Arabia, the implications could be severe.
“Virtually all of our LNG imports come through the Strait of Hormuz,” said a senior official from Petrobangla. “If it’s closed or unsafe for shipping, our energy security will be in jeopardy. Not only will prices soar, but there may also be physical supply disruptions.”
Rising Energy Prices: The Most Immediate Impact: The most visible early consequence of the crisis is the rise in crude oil prices, which have already increased by 3.9% for Brent crude and 4.3% for WTI in just a few days. Analysts expect these prices to spike further if hostilities continue, especially if any damage occurs to oil facilities or major tankers.
Dr. Mostafizur Rahman, Honorary Fellow at the Center for Policy Dialogue (CPD), warned: “Bangladesh is highly vulnerable to oil price shocks. We are heavily dependent on imported fuel for power generation and transportation. Higher oil prices will not only balloon the import bill but also push up inflation, increase the budget deficit through fuel subsidies, and put pressure on the current account.”
Bangladesh’s import bill for fuel is already under strain, consuming over $10 billion annually. If prices rise by 20-30%, which is entirely possible under a prolonged war scenario, the country may have to either cut back on imports or increase consumer fuel prices, both of which could have political and economic repercussions.
Inflation, Production Costs and the Retail Market: Increased energy costs will raise transportation and production expenses across industries. Manufacturing units that depend on gas or diesel for power and transport will be directly affected, leading to higher production costs.
“If fuel prices go up, the cost of transportation and raw materials will also rise. This will directly impact the cost of finished goods,” said Fazlul Haque. “Eventually, prices at the retail level will rise, and this will hit consumers hard.”
Such a scenario would further fuel inflation, which is already running above 9%, and stretch consumer purchasing power. Essential commodities, particularly those dependent on import-based supply chains, will become more expensive, adding pressure to low and middle-income households.
Exports and Global Demand at Risk: The impact isn’t limited to imports. Exports could also take a hit, as global demand slows amid economic uncertainty. The European Union and the United States, Bangladesh’s top export markets, are expected to experience financial turbulence if oil prices rise and consumer confidence dips. Shawkat Aziz Russell pointed out: “Our economy is dependent on global buyers. If they cut back on orders due to economic uncertainty, we will suffer. Exporters are already facing order cancellations and payment delays in some sectors.”
Export logistics could become more expensive and time-consuming as ships may need to reroute to avoid the Middle East. Air freight, already costly, may also see further delays as airspace restrictions expand across the Gulf region.
Financial Markets and Foreign Exchange Pressure: The crisis in the Middle East also threatens to destabilize foreign exchange markets. A spike in global oil prices will increase Bangladesh’s import bills, widen the trade deficit, and deplete already shrinking foreign exchange reserves, currently hovering around $17.5 billion.
“If energy imports get more expensive, the taka will come under further pressure,” said Dr. Fahmida Khatun, Executive Director of CPD. “This may lead to further depreciation, making imports costlier and stoking inflation. The central bank’s capacity to defend the currency will be limited.”
Remittances Also Under Threat: Bangladesh receives over $21 billion annually in remittances, a lifeline for the economy. Much of this comes from workers in Middle Eastern countries like Saudi Arabia, the UAE, Oman, and Qatar. If conflict expands across the Gulf region, migrant jobs and income flows may be disrupted.
“Remittances are at risk. A prolonged conflict could lead to job losses or lower earnings for our expatriates,” said a government official in the Ministry of Expatriates’ Welfare. “We are closely monitoring the situation.”
Call for Preemptive Planning and Strategic Action: Economists are urging the government to act swiftly to mitigate potential shocks. Suggested measures include: Diversification of Energy Sources - Increase investment in renewable energy and accelerate domestic gas exploration. Fuel Price Stabilization - Use strategic reserves and negotiate long-term import contracts with flexible clauses.Export Incentives - Provide temporary support for exporters facing increased logistics costs. Strengthening Remittance Channels - Encourage formal channels for remittance inflows through policy incentives. Macroeconomic Coordination - Coordinate monetary and fiscal policies to manage inflation and maintain stability.
The Calm Before a Potential Storm: While the conflict in the Middle East remains localized for now, its potential to evolve into a broader regional war is real, with devastating global economic consequences. For Bangladesh-a country already navigating challenges like foreign debt, inflation, and currency volatility-the crisis could become a tipping point.
As businessmen brace for rising costs, shrinking margins, and unstable markets, there is growing consensus that policy preparedness is essential. Strategic planning, energy diversification, and global diplomacy must now take center stage to shield the economy from external shocks. Until then, the sentiment in Bangladesh’s business circles remains one of nervous anticipation, hoping for de-escalation but preparing for the worst.
