¶¶Òõ¾«Æ·

With no sign of de-escalation of the tensions in the Middle East and the closure of the Strait of Hormuz under Iran’s consideration, Bangladesh appears to face a wave of fresh economic crises due to a surge in energy prices and a potential supply shortage, energy experts and economists said.

The shipping of about 85 per cent of liquefied petroleum gas and 10 per cent of Brent crude oil imported by Bangladesh depends on the Strait of Hormuz, one of the world’s key oil trade routes, according to official data.

The aerial campaign targeting sites across Iran that Israel began on June 13 continued on Monday, with Israel adding energy infrastructures in its new targets and Iran retaliating by launching missile attacks, has fuelled the fear that the crisis would have ripple effects globally, with commercial maritime communications potentially disrupted.

The Middle East is one of the most important sources of world energy with world’s some of the biggest fuel reserves located in the region.

Through the Strait of Hormuz, which is about 35 kilometres wide at its narrowest point and about 165 kilometres long, roughly 20  per cent of all global oil travels, alongside scores of freighters using the same route connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea in the Indian Ocean.

One needs to pass through the territorial waters of Iran and Oman to pass through the Strait of Hormuz.

‘Yet another storm with potential to cause global-scale damage is rising,’ said energy expert Badrul Imam.

‘Bangladesh should brace for a massive onslaught of crises to be resulted from a lower energy supply and intensified inflationary impacts,’ he said.

The price of crude oil has increased by nearly 7 per cent since June 13 to reach $73.27 on Monday while the price of gas rose by 3.39 per cent on June 13 to $3.70 an MMBtu, indicating the instability the global energy market was thrown into by the Middle East tensions.

An acute energy crisis was already costing Bangladesh an arm and a leg for it imported expensive liquefied natural gas to make up for depleting local gas production.

Even with imported LNG, Bangladesh could supply roughly 2,600 million cubic feet a day against the demand for 4,000mmcfd. Bangladesh’s industrial infrastructure is hugely depended on gas-based machinery. Gas is also the raw material for fertiliser, which is heavily subsidised and its local production is crucial for agriculture. Gas meets about a half of primary energy need. About half of Bangladesh’s installed generation capacity of over

27,000 megawatts is relying on gas.

Imported LNG accounts for about a fourth of the gas supplied annually. About 75 per cent of the imported LNG bought in 56 cargoes under long-term contracts from Qatar and Oman uses the Strait of Hormuz as its route, said Petrobangla

officials.

Roughly 30 per cent of the LNG from the spot market also depends on the Strait of Hormuz for transportation.

‘There are already reports of fuel price increasing. Even if there is no disruption in the energy supply chain, the Middle East instability will impact us,’ said Rafiqul Islam, a director of the Bangladesh Oil, Gas and Mineral Corporation, also known as Petrobangla.

Import of liquid oil, on the other hand, is at risk by a margin of roughly 7 lakh tonnes. Bangladesh imports about 65 lakh tonnes of liquid oil, including 50 lakh tonnes of refined oil, according to the Bangladesh Petroleum Corporation.

Oil travelling from Saudi Arabia comes through the Strait of Hormuz, the BPC said, adding that other sources of Bangladesh’s oil import included India, Singapore, Malaysia, Indonesia and China.

With its readymade garment manufacturers raising the alarm over energy crisis that is forcing factory closure, Bangladesh is struggling really hard to get energy supplies, with an occasional exhaustive use of its foreign currency

reserves.

Bangladesh is currently facing the worst economic crisis in decades, trying to recover from the fallouts of the Covid pandemic and the Russia-Ukraine war. Its other economic lifeline, manpower export, is also heavily dependent on the Middles East market.

‘The crisis is likely to bear serious global inflationary consequences with almost no chance of anybody escaping those,’ said economist Anu Muhammad.

Over the past decade particularly, he said, Bangladesh exposed itself so much to global instability by aggressively increasing import dependence and ignoring the need to build own capacity and skills.

It is too early to predict the extent of the impacts of the crisis since a lot depends on the length of its existence, experts said.

Analysts quoted by different foreign and local media outlets predicted that Iran might not eventually close down the Strait of Hormuz since its functioning was essential for the country’s economy.

But they warned that any United States’ instigation or involvement could change the situation beyond imagination.

Most of the analysts, including local ones, thought that the crisis would drag on, even if it did not escalate into a full-scale war, potentially throwing the world into an uncertain, gloomy and hostile future.

‘This will be definitely a big disaster for Bangladesh,’ said Hasan Mehedi, member secretary of the Bangladesh Working Group on Ecology and Development, a platform of green activists.

The Gulf War had caused the crude oil price to rise to $40 a barrel in September 1991. A year before the war began the crude oil price was less than $15. The oil price never went back to even $30 a barrel.