The concerns among businesses in Bangladesh are growing due to the conflict between Iran and Israel, which broke out on Friday, after a surprise attack by Israel on Iran.
The businesses stated that, as the region is one of the world鈥檚 key oil and gas producing regions, the prolonged war, probability of the Hormuz Strait closure, and tensions in the Red Sea region聽may directly impact the country鈥檚 export, import and manufacturing.
The Strait of Hormuz, connecting the Persian Gulf to the Arabian Sea, is recognised as one of the world鈥檚 most important routes for global trade and oil and gas transportation.聽
Bangladesh uses the Suez Canal and the Red Sea route to import raw materials and other products from Europe and the Middle East.
Moreover, about 70 per cent of Bangladeshi exports rely on these routes to sail to Europe and the US.
If the Hormuz Strait is closed and tensions erupt in the Red Sea regions, Bangladeshi traders would be forced to use the Cape of Good Hope routes passing South Africa.
Export-import through this African route takes 11-13 more days and adds聽about 20 per cent more cost, the businesses said.
According to the shipping agents, many shipping lines avoided the Red Sea region for a considerable period due to the Houthis鈥� attacks on commercial vessels.
A further tension in this region would severely impact the country鈥簊 trade, as shipping lines might avoid the route or request additional insurance.
Mahmud Hasan Khan Babu, president of the Bangladesh Garment Manufacturers and Exporters Association, said on Monday that the ongoing Iran-Israel war was creating new challenges for businesses and would also impact the readymade garment sector.
He also said that any hike in oil prices would have spillover effects, and the RMG sector would also face this as operational costs might increase.聽
Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, stated that the shipping routes could be affected if the conflict intensifies and the situation escalates into a full-scale war, as no shipping line would risk sailing under such conditions.
Mohiuddin Rubel, former director of the BGMEA and managing director of the Bangladesh Apparel Exchange, stated that a full-scale war between Iran and Israel could also impact the Red Sea and Suez Canal region, a key route for global trade.
鈥楢ny prolonged conflict may lead to increased shipping costs and extended lead times, particularly impacting the transportation of oil and other essential commodities,鈥� he added.
In the event of escalating tensions on the Red Sea route, vessels would need to navigate down the Cape of Good Hope, adding substantial mileage and up to 15 days to the shipping duration, which could increase shipping costs by 15-20 per cent.聽
The Suez Canal handles about 12 per cent of global trade and 30 per cent of international container traffic.
Syed Iqbal Ali Shimul, senior vice-president of the Bangladesh Shipping Agents Association, told 抖阴精品 that due to the current conflict in the Middle East, many vessels are avoiding the Red Sea and the Strait of Hormuz, opting for alternative routes, particularly around the Cape of Good Hope.
However, this detour adds approximately 12 more days to the voyage.
He also said that due to detouring, bunker costs might rise by 50 per cent, and freight charges might be increased by 30鈥�40 per cent.聽
In 2023, approximately 21 million barrels of oil flowed through the waterway daily, accounting for around 20 per cent of global petroleum liquids consumption.
Moreover, another 85 million tons of liquefied natural gas from Qatar and the United Arab Emirates were also sent through the strait last year, equivalent to around 20 per cent of global demand.
Businesses stated that the inability of oil to transit through the Strait of Hormuz, even temporarily, can impact global energy prices, increase shipping costs, and create significant supply delays.
They also stated that when oil prices rise, the cost of production increases, which is eventually passed on to consumers, particularly for energy-intensive goods such as food, clothing, and chemicals.
Babu said that if the cost of oil, energy, and transport hikes, the prices of聽all product categories聽would also surge.
Ehsan stated that Bangladesh imports LNG from Qatar via the Strait of Hormuz. The geopolitical uncertainty and oil price聽hike could increase inflation rates in the West, prompting buyers to scale back on purchasing products, he added.
Syed Iqbal Ali said that Bangladesh usually import oil and LNG from Hormuz-associated regions, along with a small portion of spices from Iran.聽
However, bitumen imports could face some disruption as the demand for bitumen rises during the monsoon for increased road maintenance work.
The businesses said that the Iran-Israel conflict has erupted at a time when the global market is already plagued by a range of uncertainties like US President Donald Trump鈥檚 tariff threats, which have disrupted international trade and shaken investor confidence.
