Full Breakdown
Iran War Fuels Energy Crisis in Bangladesh
5/10/2026, 11:01:36 PM
Energy Shock from the Iran Conflict
The United States and Israel’s war against Iran has lifted oil and gas prices, tightening supplies through the Strait of Hormuz. Bangladesh, a net importer of diesel and LNG, now faces fuel shortages, long queues and industrial power cuts.
Bangladesh’s Fuel Dependence
Bangladesh imports diesel and LNG for transport, power and garment factories, with about one-fifth of world oil passing the Hormuz chokepoint before reaching the country. The government has increased imports, imposed fuel rationing and sought extra LNG from India, which also sources fuel from Russia.
Economic Indicators
The Asian Development Bank cut its 2026 growth forecast for developing Asia to 4.7% and expects inflation at 5.2% as oil prices rise. The World Bank projects Bangladesh’s fiscal-year growth at 3.9% and warns of a widening current-account deficit. The government may spend $1.07 billion for LNG subsidies in the April-June quarter.
Sectoral Impacts
Ride-share driver Tariqul Islam queues for fuel; with fuel lasting two days per purchase, he must idle one day, cutting earnings and threatening support for his university-going daughter and college-going son. Garment makers like Arrival Fashion Limited run diesel generators four hours daily, raising costs and contributing to a 30-40% drop in factory output and a 35-40% rise in business expenses.
Official Statements & Policy Measures
World Bank’s Jean Pesme warned that rising energy costs are making the fiscal situation more difficult. Asian Development Bank flagged inflationary pressure from oil prices. Bangladesh’s authorities have introduced fuel rationing, limited evening mall hours and shut fertilizer factories to divert gas to power plants.
Criticism
Bangladesh Chamber of Industries president Anwar-Ul Alam Chowdhury warned exports to Europe and the United States could fall 5-13%, risking market share to India, Vietnam and Cambodia. Garment worker Mosammet Runa fears job losses and says citizens should not become victims of a conflict they did not cause.
Conflicting Growth Forecasts
The Asian Development Bank projects 2026 growth at 4.7%, while the World Bank estimates 3.9% for the fiscal year ending June 2026, reflecting uncertainty over the conflict’s economic impact.
Verbatim Quotes
- “If this situation continues, we will have to move back to our village and find some other way to earn a living,” — Tariqul Islam, Ride-share driver
- “obviously making the fiscal situation more difficult.” — Jean Pesme, World Bank division director for Bangladesh and Bhutan
- “For that reason, the cost of doing business for exporting garments has increased quite significantly in past one month,” — Alvi Islam, Director of Arrival Fashion Limited
- “We are innocent people. The world should not make us victims,” — Mosammet Runa, Garment worker
Outlook
Bangladesh plans to secure extra LNG, keep fuel rationing and monitor inflation. International lenders warn that a prolonged Iran conflict could further strain finances, while industry groups seek diversified energy sources to stabilise garment production and transport services.
