Bangladesh’s energy security is under growing threat as escalating tensions between Iran and Israel have driven up global fuel prices and increased fears of supply disruptions, especially in critical maritime trade routes such as the Strait of Hormuz. With the conflict intensifying in the Middle East, fears are mounting that a prolonged geopolitical crisis could derail Bangladesh’s already fragile energy landscape, threatening electricity production, industrial output, transportation, and living costs across the nation.
According to international benchmarks, Brent crude oil prices surged to $80 per barrel, a 3.9% increase from previous rates, while West Texas Intermediate (WTI) crude prices jumped by 4.3% to $77 per barrel.
These developments mark the highest price hike in months and come amid Iran’s warning to potentially close the Strait of Hormuz, through which roughly 21 million barrels of oil are shipped daily-equivalent to nearly 20% of global petroleum consumption.
This narrow but strategic passage in the Persian Gulf, bordered by Iran and Oman, is the key channel for oil and liquefied natural gas (LNG) exports from Gulf nations like Qatar and Oman, two of Bangladesh’s major LNG suppliers.
Rising Fuel Prices: A Global Shock, A National Crisis: The price spike in oil and LNG markets is already rippling through Asia. Last week, LNG prices in the Asian spot market rose sharply, and analysts predict continued volatility if the Iran-Israel conflict escalates further. The pressure of soaring import costs threatens to add another layer to Bangladesh’s economic woes.
A senior official at Bangladesh Oil, Gas and Mineral Resources Corporation (Petrobangla) confirmed that disruptions to the global supply chain, including weather-related delays, have already caused gas shortages in several regions of Bangladesh.”We are seeing the effects already. The delivery of LNG cargoes is delayed, and local consumers are experiencing gas outages. If tensions in the Middle East persist, the situation could become unmanageable,” the official said.
LNG Imports in Jeopardy: Hormuz Closure Could Be a Game-Changer: Bangladesh’s dependence on imported LNG has increased significantly in recent years. Currently, more than 30% of the country’s gas demand is being met through LNG imports, most of which come from Qatar and Oman under long-term agreements. Both these countries use the Strait of Hormuz to ship their LNG cargoes to global destinations, including Bangladesh.
The Energy and Mineral Resources Division had earlier approved the import of 115 LNG cargoes in 2025. However, due to operational limitations and adverse weather forecasts, the government has scaled this down to 109 cargoes. Out of these, 56 shipments were contracted under long-term deals with Qatar and Oman, with 23 already delivered. The remaining 33 cargoes are at risk of delay or rerouting if the Strait of Hormuz becomes inaccessible due to military action.
If the route is blocked, ships may be forced to take alternative routes through Abu Dhabi, significantly increasing transportation time and costs. Moreover, security concerns in nearby maritime zones could also affect insurance and freight rates, making LNG even more expensive.
Historical Precedent: The Price of War: Energy experts point to the Russia-Ukraine conflict in 2022 as a comparable event, during which the spot price of LNG skyrocketed to $60 per MMBtu. At its peak, Bangladesh paid as much as $36 per unit-well above the usual contract prices.
That year, faced with a foreign currency crisis and soaring costs, the government suspended LNG imports from the spot market for seven consecutive months, resulting in frequent power outages and a significant decline in electricity production. The experience serves as a stark warning of what could unfold again if geopolitical tensions persist.
Expert Insights: A Dangerous Crossroads: Speaking to reporters, Petrobangla’s Director (Finance), AKM Mizanur Rahman, expressed concern over the potential consequences of a prolonged Iran-Israel conflict: “We import most of our LNG from Qatar via the Strait of Hormuz. If Iran closes it, this lifeline will be cut. LNG can only be imported by sea-there’s no land-based alternative. Prices will rise globally, and we’re already seeing market volatility.” He added that any surge in LNG prices would directly impact Bangladesh’s power sector, as gas-fired plants depend heavily on imported LNG.
Dr. Badrul Imam, energy expert and former professor at Dhaka University, warned that continued instability could cause a ripple effect across all sectors of the economy: “If LNG imports are disrupted or become too expensive, power generation will fall. Industries, especially export-oriented ones like garments, will be the first to suffer. Transportation and agriculture will be next, and ultimately, this will lead to inflation across the board.”
Salehuddin Ahmed, former Governor of Bangladesh Bank, emphasized that the government must prepare for the worst-case scenario: “Energy security is national security. We cannot afford another energy shock like in 2022. The government must diversify energy sources, invest in local gas exploration, and secure LNG contracts with flexible delivery terms.”
Inflation and Economic Fallout: A Looming Threat: Increased costs of energy inputs will inevitably lead to higher electricity generation costs. This, in turn, will raise industrial production expenses, transport fares, and agricultural irrigation costs, all contributing to inflation.
Energy experts are warning that the price hikes may push inflation well above the current 9% mark, a figure that has already been straining household incomes. With limited fiscal space, the government may be unable to extend subsidies or launch counter-inflationary programs.
Md. Shamsul Alam, energy adviser to the Consumers Association of Bangladesh (CAB), said: “Energy insecurity will hit consumers hard. Utility bills, food prices, transport fares-everything will go up. Without timely government intervention, public discontent may also rise.”
Strategic Vulnerability: Overreliance on Imports: Bangladesh’s energy model is currently import-dependent, with little margin for supply disruption. According to the Power Division, over 52% of electricity is now generated from gas-based power plants, many of which rely on imported LNG. The long-term solution lies in diversifying energy sources, including renewable energy, greater use of coal (despite environmental concerns), and domestic gas exploration.
However, onshore and offshore gas exploration projects have been delayed repeatedly due to lack of investment, red tape, and technical expertise.
What Lies Ahead: Government’s Dilemma: The interim government, already burdened with foreign debt repayment challenges and a shrinking foreign exchange reserve, finds itself in a precarious position. Officials have confirmed that discussions are ongoing with QatarEnergy and Oman LNG regarding contingencies, including flexible scheduling and rerouting options.
The Ministry of Energy is also considering the possibility of re-engaging with the international spot market despite the high prices. However, such purchases would further strain the country’s limited dollar reserves, which stood at $17.5 billion as of June-barely enough to cover three months of imports.
A Time for Strategic Action: With the Middle East on the brink of deeper conflict and energy markets reacting sharply, Bangladesh must act urgently to safeguard its energy security. Diversifying supply chains, boosting domestic gas production, increasing investment in renewables, and securing flexible LNG contracts are no longer policy options-they are imperatives.As one senior energy official put it: “We are entering dangerous territory. Without immediate steps, this energy crisis could spiral into a broader economic shock.”For now, the fate of Bangladesh’s energy stability lies thousands of miles away in the Strait of Hormuz-but its consequences will be felt in every household, factory, and farm across the country.
