The war in the Middle East has pushed up global prices of fuel oil and gas while also creating uncertainty over supply. Bangladesh has also come under strain. If the price hike persists and supply disruptions deepen, the country could face shortages and rising domestic prices.
Iran has retaliated after the United States and Israel launched attacks on the country. As a result, the Strait of Hormuz, one of the world’s most critical energy transit routes off Iran, has been rendered largely inoperative. Following the attacks, Qatar suspended production and exports of liquefied natural gas. Meanwhile, after Iranian drone strikes, Saudi Arabia’s state-owned oil giant Saudi Aramco shut down its largest refinery at Ras Tanura as a precautionary measure.
Sources at the energy and mineral resources division said nearly 100 per cent of Bangladesh’s fuel oil demand is met through imports. All crude oil imports come from Saudi Arabia and the United Arab Emirates (UAE), while refined fuel is sourced from various countries. In addition, 35 per cent of the country’s gas demand is met by imported LNG, most of which originates in the Middle East. The war has created uncertainty over these imports.
The price of crude oil has already risen by 10 per cent to around USS$80 a barrel. Analysts warn that if the conflict drags on, prices could exceed $100 a barrel. Global LNG prices have increased by 20 to 25 per cent. At the same time, the US dollar has strengthened against major currencies, a development that is likely to push up Bangladesh’s energy import costs further.
Nearly 20 per cent of the world’s total oil and gas supply is transported via vessels passing through the Strait of Hormuz.
It is the only maritime entry point to the Persian Gulf, with Iran on one side and Oman and the United Arab Emirates on the other. Iran has issued warnings that no vessel should attempt to transit the strait, leaving many ships waiting at its entrance.
According to data from shipping analytics platform Kepler, at least 150 oil tankers have anchored outside the strait. However, some Iranian and Chinese vessels did pass through yesterday.
Kepler analyst Homayoun Falakshahi told international news agencies that the Iranian threat has effectively closed the strait. The route carries significant risks, and rising insurance costs have led ships to avoid it altogether.
Meanwhile, on Sunday, the Organisation of the Petroleum Exporting Countries (OPEC) and allied nations decided to increase daily oil production by 206,000 barrels. The aim is to partially mitigate potential price hikes, although some experts caution that the measure may provide limited relief.
Saudi refinery
Bangladesh Petroleum Corporation (BPC) imports 700,000-800,000 tonnes of crude oil, Arabian Light Crude (ALC), annually from the Ras Tanura refinery and terminal in Saudi Arabia. This crude oil is refined at Eastern Refinery Limited in Chattogram before being supplied to the domestic market. The precautionary shutdown of the Ras Tanura refinery by Saudi Aramco has created uncertainty over the continuity of supply.
According to BPC’s schedule, 100,000 tonnes of crude were to be loaded onto a vessel from Ras Tanura between 1 and 3 March. Sources say the ship is currently at the port, awaiting loading. However, with the refinery closed, it is uncertain whether the oil can be loaded as planned, which is the primary cause of concern.
To transport oil from Ras Tanura to Bangladesh, vessels must exit the Persian Gulf and pass through the Strait of Hormuz. Military oversight and heightened security measures have introduced uncertainty in maritime transit.
As a result, even if loading at Ras Tanura is completed, it is unclear whether the vessel can pass through the strait and proceed toward the Gulf of Oman and the Arabian Sea on schedule. Any delay could extend the time required for crude oil to reach Bangladesh.
BPC chairman Md Rezanur Rahman told Prothom Alo that around 20 per cent of the country’s total fuel oil imports arrive in crude form via the Strait of Hormuz. The remaining 80 per cent of refined oil is imported from ports in China, Singapore, Malaysia, and Indonesia, which do not rely on the strait. While there is no immediate risk to overall supply, uncertainty remains regarding crude oil.
Focus on alternative sources
BPC says that as of yesterday, the country had 217,317 tonnes of diesel in stock, enough for 14–15 days of consumption. A further 32,196 tonnes were scheduled to arrive on Monday night and 33,000 tonnes on Tuesday. Petrol stocks stand at 21,705 tonnes, sufficient for around 17 days, while octane reserves of 34,133 tonnes meet roughly 31 days’ demand. Furnace oil stocks are 78,278 tonnes, enough for almost two months.
Experts note that Bangladesh’s energy supply system relies heavily on continuous imports. Any delay in multiple shipments could create pressure, particularly affecting diesel-dependent sectors such as agriculture, transport, and power generation. The Boro season is ongoing, and rising temperatures are driving higher electricity demand.
BPC purchases fuel at Singapore market rates, paying the average price over five days on Platts. Sudden price increases in the market can therefore raise import costs quickly. Increases in diesel and octane prices will push up import expenditure, although vessel freight rates are fixed until June, so shipping costs will not rise immediately. Experts point out that the combination of operational suspensions at strategic facilities like Ras Tanura, uncertainty in the Strait of Hormuz, and rising international prices has made fuel supply management more complex for BPC. How quickly the situation returns to normal remains the key question.
When asked, state minister for power, energy and mineral resources Anindya Islam Amit told Prothom Alo that the government is monitoring the Ras Tanura refinery shut down. Discussions are underway on alternative sources and revised schedules to ensure that supply is not disrupted.
Concern over gas supply
Bangladesh’s daily gas demand stands at 3.8 billion cubic feet, while current supply is around 2.65 billion cubic feet. Of that volume, 950 million cubic feet comes from imported LNG. Ahead of the summer season, imports were scheduled to be increased to 1.05 billion cubic feet a day. Without higher imports, gas supply to the power sector cannot be expanded, which could reduce electricity generation and trigger load-shedding. Lower pressure in pipelines may also cause disruption to household cooking.
Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) says 115 LNG cargoes are planned for import this year. Of these, 40 cargoes are due from Qatar and 16 from Oman under long-term agreements, with the remaining 59 to be sourced from the spot market.
Qatar is among the world’s largest LNG suppliers, and its shipments to Bangladesh pass through the Strait of Hormuz. Qatar has also halted LNG production after coming under Iranian attack, creating further uncertainty over supply.
A senior Petrobangla official, speaking on condition of anonymity, said there is no immediate uncertainty over LNG supply until 12 March. However, if incoming vessels are disrupted, supply could begin to tighten thereafter. A total of 11 cargoes are scheduled to arrive in March, several of which have already passed through the Strait of Hormuz.
A crisis similar to 2022
Energy markets were previously destabilised in 2022 by the impact of the Russian invasion of Ukraine. LNG prices surged beyond reach, with per-unit costs exceeding $60. Although Bangladesh managed purchases at up $36, it was later unable to continue at that level.
From July of that year, LNG imports from the spot market were suspended for seven consecutive months. The move led to gas shortages, reduced electricity generation and widespread load-shedding.
Former special assistant on energy to the chief adviser of the caretaker government, M Tamim, told Prothom Alo that there is a risk of severe disruption if the conflict is prolonged. Countries would compete aggressively for imports, pushing prices even higher, he said. With limited reserves at present, Bangladesh must quickly secure alternative sources to ensure supply.