Top economists and energy analysts are calling on the government to take "emergency preemptive measures" to secure Bangladesh’s fuel and gas supply, as the price of crude oil surged to $112 per barrel following an Israeli strike on the world's largest gas field and no visible sign that the war on Iran is likely to subside soon.
The sharp spike in energy costs—sparked by the escalating conflict in West Asia (or Middle East, from a Western perspective)—poses a significant threat to Bangladesh’s foreign exchange reserves and domestic inflation, experts warned.
Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), emphasized that Bangladesh can no longer afford a "wait-and-see" approach.
"The escalation in the Middle East has moved from a regional concern to a direct threat to global energy corridors," Professor Rahman said.
"With oil prices jumping to $112 on Thursday, the fiscal pressure on Bangladesh will be immense. We must take early measures to secure our supply chains to avoid a sudden breakdown in industrial production and power generation," he added.
He further noted that the government should immediately review its energy procurement strategy, particularly its reliance on volatile spot market purchases, which have become prohibitively expensive following the attack on the South Pars field, the world's largest gasfield that is shared by Iran and Qatar (which calls it the North Dome), which makes it a critical global hub for LNG and condensates.
Market Volatility and Economic Risks
Global markets reacted sharply on Thursday, with Brent crude futures climbing over 8 percent to settle near $112.40, although it has since come down below $110 per barrel again. The attack on South Pars was even condemned by Israel's partners in the war they are waging against Iran, which threatens to choke the Strait of Hormuz.
Market experts in Dhaka noted that a $1 increase in oil prices adds millions to Bangladesh's import bill. "At $112, we are looking at a potential balance-of-payments strain," said a senior macroeconomist, Dr. Mashrur Reaz.
"If this persists, the government may be forced to hike domestic fuel and electricity prices, which would trigger a fresh wave of inflation across the economy," he said.
To buffer against this volatility, economists and market experts suggested a three-pronged strategy:
Long-term Contracts: Moving away from the spot market toward more stable, long-term supply agreements for LNG and fuel.
Storage Expansion: Maximizing the country’s fuel storage capacity to ensure a buffer in case of shipping disruptions.
Energy Conservation: Reinforcing national energy-saving measures to reduce the overall demand for high-cost imports.
Energy analysts warned that if the conflict continues to target high-value energy infrastructure like South Pars, the global supply chain for LNG could face long-term delays, directly impacting the national grid and the manufacturing sector, including the vital Ready-Made Garment (RMG) industry.