Bangladesh’s heavy reliance on imported energy is exposing the economy to global price shocks as geopolitical tensions involving Iran push fuel prices higher in international markets, analysts and a report by the Institute for Energy Economics and Financial Analysis (IEEFA) said.
The report said crude oil prices have risen by 51 per cent and liquefied natural gas (LNG) prices by as much as 77 per cent in recent weeks, highlighting the risks faced by energy-import-dependent economies such as Bangladesh.
Bangladesh imports most of its LNG, mainly from Qatar and Oman under long-term contracts, and purchases additional supplies from the spot market during shortages.
According to IEEFA, the country recently bought spot LNG at $28.28 per MMBtu, almost three times the benchmark Japan-Korea Marker price recorded last month.
“In an increasingly uncertain geopolitical landscape, countries that accelerate the transition to renewable energy will be better positioned to protect their economies from future energy crises,” the report said.
Economists warned that sustained volatility in global energy markets could raise inflation, increase pressure on foreign exchange reserves and weaken macroeconomic stability.
“If global energy prices continue to rise, Bangladesh’s import bill will increase significantly, creating pressure on the balance of payments and exchange rate,” Centre for Policy Dialogue Distinguished Fellow Mustafizur Rahman told TIMES of Bangladesh.
He said the country’s dependence on imported fossil fuels makes it particularly vulnerable to geopolitical shocks, recalling the surge in Bangladesh’s energy import costs after the Russian invasion of Ukraine in 2022.
Energy experts said accelerating renewable energy development could help reduce such risks.
IEEFA estimates that developing just 1 gigawatt of solar power capacity could save Bangladesh nearly $3 billion in LNG import costs over the next 25 years.
“Renewable energy is not only an environmental necessity but also an economic strategy for Bangladesh,” Consumers Association of Bangladesh Energy Adviser Shamsul Alam said.
“Increasing solar and wind power can reduce exposure to volatile global fuel markets,” he added.
He also said electricity generated from LNG currently costs three to four times more than solar power, underscoring the financial benefits of expanding renewable energy.
Expanding investment in solar, wind and energy storage could strengthen Bangladesh’s energy security while shielding the economy from future global fuel price shocks, he added.
The duration of the current geopolitical tensions remains uncertain. US President Donald Trump recently said the conflict could last “four to five weeks” and called for Tehran’s “unconditional surrender.”
At the same time, Qatar’s energy minister warned that prolonged instability could push global oil prices to as high as $150 per barrel, potentially triggering another wave of global inflation.
