Bangladesh Fuel Costs Soar 40% as Middle East Crisis Disrupts Imports

"This type of crisis is repeating itself, echoing the price shocks caused by Russia's invasion of Ukraine, causing the costs of Bangladesh's dependence on fossil fuels and its delayed energy transition to mount," the ZCA analysts wrote in its latest report.

It noted that the Russia-Ukraine conflict had sent Bangladesh into an economic crisis, with GDP levels only recovering in 2025. Asian liquefied natural gas (LNG) rose by 390 per cent in the year leading up to Russia's invasion, followed by a 48 per cent increase in the five months after it, resulting in power demand shortfalls and months of power cuts. In October 2022, blackouts left 130 million people without power.

The hefty price tag, driven by the ongoing conflict in the Middle East, threatens to severely drain the country's foreign exchange reserves, reducing its import cover ratio from 5.7 months to 4.9 months.

The crisis exposes Dhaka's deep vulnerability to volatile international energy markets, as 46 per cent of the country's total energy supply came from imports in 2023. In the fiscal year 2024-2025, imports accounted for 65 per cent of its power needs.

Much of this vital fuel flows through the Strait of Hormuz, where shipping is now severely disrupted. Bangladesh imports around 1.4 million tonnes of crude oil through the strait annually under long-term contracts with Saudi Aramco and Abu Dhabi National Oil Company.

An Aramco cargo of 100,000 tonnes bound for Bangladesh is already delayed in the Gulf because of the war, noted the ZCA report.

Supply pressures are emerging across multiple energy sectors. Confirming the squeeze on refined products, the Bangladesh Petroleum Corporation (BPC) reported in early March: "Around 60,000 tonnes out of the 293,000 tonnes of diesel planned for import in March have been deferred or cancelled."

Simultaneously, Qatar, which accounts for 75 per cent of Bangladesh's LNG imports, has suspended production and shipments. Deep LNG dependence is driving fiscal distress across the power sector.

Six out of seven LNG cargoes scheduled for April in the import plan of the state-owned Petrobangla -- which is mandated to manage oil, gas and other mineral resources -- are expected to pass through the strait. Delivery of half the remaining cargoes is uncertain, according to reports.

- IANS