THE ongoing Iran war, now marked by a fragile 14-day ceasefire with limited passage reportedly allowed through the Strait of Hormuz, is rapidly emerging as one of the most severe global energy disruptions in recent years, with consequences that extend far beyond the immediate theatre of conflict. For Bangladesh, a country structurally dependent on imported energy, the shock is not distant or abstract. It is already transmitting through fuel markets, supply chains and, increasingly, the agricultural sector, raising concerns about inflation, production losses and food security.
At the centre of the crisis lies the disruption of the Strait of Hormuz, a strategic maritime route through which a significant share of global oil and liquefied natural gas flows. Any instability in this corridor inevitably reverberates across global energy markets. Since the onset of the conflict, crude oil prices have risen sharply, with physical prices reaching between $140 and $150 per barrel, nearly double the average levels recorded in 2025. Liquefied natural gas prices in Asian markets have also surged steeply, forcing import-dependent countries such as Bangladesh to rely increasingly on volatile spot purchases at significantly higher costs.
This exposure reflects a deeper structural vulnerability. Bangladesh imports a substantial proportion of its primary energy, including nearly all of its fuel oil and a growing share of its natural gas in the form of LNG, much of it sourced from the Middle East. As a result, disruptions in that region translate almost immediately into domestic pressure. Rising import bills are straining foreign exchange reserves, while the government faces mounting subsidy burdens in its effort to contain domestic price increases. Early signs of stress are already visible in the form of supply constraints, reduced industrial activity and pressure on fuel distribution systems.
The situation is further complicated by supply-side disruptions. Shipping uncertainties in the Strait of Hormuz have delayed or diverted LNG cargoes, particularly from key suppliers such as Qatar. Bangladesh has sought to offset these shortages by sourcing fuel from alternative markets, including neighbouring countries, but such arrangements remain temporary and insufficient to stabilise the system. If the conflict persists, the risk of sustained shortages in power generation and industrial fuel supply cannot be ruled out.
These energy shocks are no longer confined to the fuel sector. They are now filtering into the broader economy, most notably agriculture, where dependence on fuel, electricity and imported inputs is substantial. Irrigation systems across the country, especially those supporting Boro cultivation, rely heavily on diesel-powered pumps. In several regions, rising fuel costs and supply constraints have already begun to disrupt irrigation at critical stages of crop growth. Reports of diesel being sold above official prices indicate emerging distortions in distribution, which further complicate access for farmers.
At the same time, production costs across the agricultural cycle are rising. Fuel is required not only for irrigation but also for land preparation, mechanised harvesting and transport. As global energy prices increase, these costs are transmitted directly to farmers, compressing already narrow margins. Historical patterns suggest that even moderate increases in fuel prices can significantly raise per-acre cultivation costs, with implications for planting decisions in subsequent seasons.
Fertiliser supply presents another area of concern. Global disruptions linked to the conflict have affected the availability and pricing of key inputs such as urea and ammonia. Domestically, higher gas prices have increased production costs for fertiliser manufacturing, contributing to price pressures in local markets. In such conditions, farmers may be compelled to reduce fertiliser use, which in turn risks lowering yields.
The combined effect of constrained irrigation, rising input costs and fertiliser uncertainty points towards potential declines in crop production, particularly for Boro rice, which remains central to the country’s food system. Any reduction in output would have immediate consequences for market supply. Coupled with higher transportation and distribution costs, this creates a pathway for sustained increases in food prices.
For households, especially those with limited income, the implications are direct. Food expenditure already constitutes a significant share of total spending, and even moderate price increases can erode purchasing power. At a broader level, the convergence of energy and food inflation risks placing additional pressure on economic stability, particularly if the external shock proves prolonged.
The current crisis, therefore, illustrates more than a temporary disruption. It highlights the extent to which Bangladesh’s energy dependence can cascade into wider economic vulnerabilities, linking distant geopolitical events to domestic realities in both industry and agriculture. If the conflict endures, the country may face a combination of fuel shortages, production constraints and rising living costs that reinforce one another.
In such a context, the immediate challenge lies in managing supply pressures and stabilising essential sectors, particularly agriculture. Over the longer term, however, the situation underscores the need to reassess structural dependence on external energy sources and the resilience of systems that rely heavily on them. Without such consideration, similar shocks in the future may produce even more severe consequences.
Md Ikbal Faruk is head of research and implementation at Waterkeepers Bangladesh.
