Bangladesh faces $4.8 billion energy shock as Middle East crisis sends fuel prices soaring

The report warns that the rising costs of oil, gas, and coal could amount to 1.1 percent of Bangladesh’s 2024 GDP if current elevated price levels persist for a full year. The country currently spends around $12 billion annually on energy imports, according to government data cited by The Daily Star.

Researchers at ZCA noted that the situation mirrors earlier global shocks, particularly the economic fallout from Russia’s invasion of Ukraine.

“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 analysts wrote in a March report.

The report further highlighted that the Russia-Ukraine conflict had pushed Bangladesh into an economic downturn, with GDP levels only recovering in 2025.

It also pointed out that Asian liquefied natural gas (LNG) prices surged by 390 percent in the year leading up to the Ukraine war, followed by a further 48 percent increase in the months after, triggering power shortages and prolonged blackouts. In October 2022, outages reportedly left 130 million people without electricity, The Daily Star reported.

“The increased import bill will also weigh on the country’s currency, which could push up inflation and apply greater pressure on the central bank to raise borrowing costs,” the report added.

Industry leaders have also warned of worsening conditions. David Hasanat, president of the Bangladesh Independent Power Producers’ Association, said that 23 percent of the country’s power plants are currently inoperable due to gas shortages.

Meanwhile, Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association, said power cuts have risen to up to five hours daily, with diesel shortages hampering backup generation.

The escalating conflict in the Persian Gulf has also disrupted global supply chains. A senior economist at the UN Food and Agriculture Organization (FAO) described it as “one of the most rapid and severe disruptions to global commodity flows in recent times.”

He warned that the crisis is affecting global agriculture and food security, adding that “temporality matters a lot right now and the clock is ticking very hard.”

Since the outbreak of the conflict, tanker traffic through the Strait of Hormuz has reportedly fallen by more than 90 percent. The corridor normally carries about 35 percent of global crude oil shipments, along with 30 percent of fertilizer trade and a significant share of liquefied natural gas.

As a result, farmers worldwide are facing what experts describe as a “double shock” — rising fuel and fertilizer costs, both critical inputs for agricultural production.