The ongoing conflict in the Middle East, triggered by the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei, has sent shockwaves through global trade and energy markets, leaving industrial sectors in Bangladesh increasingly anxious. The Iranian Revolutionary Guard Corps (IRGC) has officially announced the closure of the strategic Strait of Hormuz, one of the world’s most critical oil shipping routes, warning that any vessel attempting to bypass the blockade will be targeted.
The escalation between Iran, Israel, and the United States over the past week has already disrupted major air and sea transport networks across Asia, the Middle East, and Europe. Over 500 international flights have been cancelled in just a few days, leaving thousands of passengers stranded at airports worldwide. Cargo movement has similarly been affected, compounding concerns about supply chain delays for essential commodities.
Global oil producers have responded to the heightened risk by raising crude prices by at least $20 per barrel. Major stock markets, including those in the United States and the United Kingdom, have experienced extreme volatility over the past several days. Yesterday, Bangladesh’s own Dhaka Stock Exchange suffered a sharp fall in share values, mirroring the downward trend in global markets. London’s stock market recorded its steepest single-month decline in over 30 days, while Japan’s market lost more than 7 percent in just a few days. The only exception has been China, where major indices have maintained positive momentum despite global turmoil.
The conflict has also affected global commodity prices. Analysts report upward pressure on wheat, maize, and soybean oil, though the long-term implications could be far more severe if hostilities continue. “Extended conflict in the Middle East could disrupt food supply chains and trigger widespread price increases,” a market analyst cited by The Daily Industry warned. Impact on Bangladesh’s Economy and RMG Sector: While Bangladesh is not directly involved in the conflict, experts warn that the economic and psychological impact on the country could be significant. The ready-made garment (RMG) sector, the nation’s export backbone, is already showing signs of strain. The Daily Industry spoke to several industry insiders and economic analysts who warned that prolonged hostilities could exacerbate the country’s ongoing economic slowdown.
Dr. Rafiquddin Ahmed, a professor in the Marketing Department at Dhaka University, told The Daily Industry, “If Iran survives another week, the United States may face severe challenges. This conflict could destabilize global energy supplies, and developing countries like ours will bear the heaviest burden. Fuel prices, including oil and gas, will rise sharply. The cost of running industries and even basic transport could increase manifold, far beyond the disruptions we faced during the COVID-19 pandemic. Some effects could last several years, making survival difficult for businesses.”
Mohammad Hatem, President of the Bangladesh Exporters’ Association (BEMA), echoed these concerns. “For the past seven months, our garment exports have been declining steadily. We hoped to reverse this trend after June, but if the Iran-Israel conflict persists, these expectations may not materialize. The situation could accelerate the ongoing downturn in our export performance,” he said.
Experts point out that the conflict’s effects could ripple far beyond immediate markets. Iran has targeted key oil and gas infrastructure in the Gulf region, including Saudi Arabia’s Ras Tanura refinery, which produces approximately 550,000 barrels per day. Qatar, the world’s second-largest exporter of liquefied natural gas (LNG), suspended production at a state-controlled facility after drone strikes. Qatar supplies 20 percent of the global LNG market, with 82 percent of its output serving Asian markets. The suspension threatens to create imbalances in the region’s energy supply chain, potentially causing further price volatility.
Remittances at Risk: Bangladesh’s large expatriate workforce in the Middle East is particularly vulnerable to the conflict. Approximately 60 percent of Bangladeshi migrant workers are employed in countries directly affected by the hostilities, including Saudi Arabia, the UAE, Qatar, Oman, Kuwait, Bahrain, Yemen, and Iraq. These workers contribute nearly 49 percent of the nation’s total remittance inflows.
“The ongoing U.S.-Israel attacks in Iran and the Iranian retaliation have targeted military installations across the Gulf. If hostilities continue, employment for Bangladeshi workers could be severely affected, which will directly hit the flow of remittances,” said a senior economist speaking to The Daily Industry. “This could compound existing domestic economic pressures, particularly in the industrial and export sectors.”
Industrial Anxiety Intensifies: The RMG sector, which constitutes Bangladesh’s largest source of foreign exchange, faces rising operational and financial stress. Utility costs and raw material imports are likely to become more expensive, while shipping delays could disrupt production schedules. Industry representatives warn that worker unrest may become a risk if wages and festival bonuses are delayed, particularly in the lead-up to Eid.
Analysts note that the current crisis may inflict more severe damage than the global economic shock during the COVID-19 pandemic. Dr. Rafiquddin added, “The Middle East is now the world’s most geopolitically unstable region. The economic consequences of this conflict could be global and long-lasting. Bangladesh may feel the indirect effects more acutely than immediate ones. Our macroeconomic stability is at risk.”
The President of the Bangladesh Knitwear and Exporters Association (BKEA), Mohammad Hatem, emphasized that timely government intervention is critical. “The RMG sector has faced a continuous decline in exports for seven months. We hoped to see recovery by mid-year, but ongoing conflict could stall this rebound. Industrial owners and workers alike are growing increasingly anxious,” he told The Daily Industry.
Global Supply Chains and Market Volatility: The broader economic implications of the conflict are profound. With the Strait of Hormuz closed and major Gulf refineries under threat, global oil and gas prices are poised for sustained increases. Shipping and air transport disruptions have already delayed shipments of essential commodities, and prolonged hostilities could affect food and energy security worldwide.
Experts warn that the disruption in fuel supply could drive up transport costs, utility expenses, and the price of everyday commodities in Bangladesh and other import-dependent nations. “A long-term conflict could push us into an inflationary spiral, compounding existing economic vulnerabilities,” said an industrial economist.
Looking Ahead: Bangladesh’s government and industry stakeholders are closely monitoring developments in the Middle East. Measures such as increasing domestic fuel reserves, securing alternative shipping routes, and coordinating with international trade partners are being considered to mitigate the potential economic fallout.
However, industry insiders stress that global stability is beyond the country’s control. “Even if Bangladesh is not a direct participant in the conflict, we cannot escape its effects on energy prices, remittances, and export competitiveness,” said a senior export analyst. “Businesses, policymakers, and workers must prepare for a period of heightened uncertainty and potential economic stress.”
The ongoing Middle East conflict underscores the vulnerability of Bangladesh’s industrial and export sectors to global geopolitical risks. For the RMG industry, which employs millions of workers and contributes significantly to national GDP, timely policy measures and international support will be crucial to avoid a deepening economic crisis. The Daily Industry will continue to track developments in global trade, energy markets, and industrial production as the situation in the Middle East evolves, providing updates and expert analysis to help businesses and policymakers navigate this unprecedented challenge.
