Iran-Israel Tensions Stoke Energy Risks for Bangladesh

Crude oil pouring out of a barrel.

Rising hostilities between Iran and Israel, following coordinated US–Israeli strikes on Iranian targets and subsequent retaliatory missile and drone attacks, have heightened fears of fresh turbulence in global energy markets.

Analysts warn that if the confrontation widens into a broader regional conflict, it could disrupt critical supply routes — particularly the Strait of Hormuz, through which roughly 20 percent of the world’s oil passes. The narrow maritime corridor is now viewed as a high-risk zone, prompting traders to factor in potential supply disruptions.

Global crude prices have already risen amid escalating geopolitical tensions. Benchmark oil climbed to around $67 per barrel on Friday, up from $61 earlier in February, as markets reacted to the increased likelihood of military escalation after inconclusive diplomatic efforts.

Implications for Bangladesh

For Bangladesh, the Strait of Hormuz is a vital energy lifeline. Nearly 90 percent of the country’s primary energy imports — including crude oil, refined petroleum products and liquefied natural gas (LNG) — transit through the Gulf route.

Bangladesh depends heavily on Middle Eastern suppliers such as Saudi Arabia, Qatar and the United Arab Emirates, leaving it highly exposed to any disruption in the region.

Any shipping delays, surge in war-risk insurance premiums, or physical blockage of the Strait would directly threaten the country’s energy security.

Economic pressure likely

A sustained rise in oil prices would inflate Bangladesh’s import bill, adding fresh strain to foreign exchange reserves. State-owned energy companies could face higher subsidy burdens unless domestic fuel prices are adjusted.

Costlier LNG and fuel oil would also increase electricity generation expenses, potentially affecting industrial output and export competitiveness — particularly in energy-intensive sectors. Analysts caution that higher transport and production costs could trigger renewed inflationary pressure.

Although Bangladesh has outlined long-term plans to expand renewable energy and diversify LNG sourcing, such measures will take time. For now, the country remains structurally dependent on Middle Eastern energy routes, leaving it vulnerable to shocks stemming from escalating regional tensions.