The closure of the Strait of Hormuz following US–Israel strikes on Iran has once again exposed Bangladesh’s heavy reliance on imported fossil fuels, raising concerns about energy security and economic stability.
Energy experts said the situation highlights the urgent need for the country to accelerate its transition to renewable energy to reduce exposure to global supply shocks.
They made this observation at an online discussion titled “Asia at the Epicentre: How a Strait of Hormuz Shock Would Hit Asian Energy Security and Economies,” jointly organised by the Institute for Energy Economics and Financial Analysis (IEEFA) and Zero Carbon Analytics on Thursday.
Located in the Persian Gulf, the Strait of Hormuz is one of the world’s most crucial energy shipping routes, carrying a significant portion of global crude oil and liquefied natural gas (LNG) exports.
Any disruption there quickly reverberates through global energy markets, hitting import-dependent economies such as Bangladesh.
Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), said the crisis has further exposed the vulnerabilities of Bangladesh’s import-dependent and debt-burdened energy sector.
“If the crisis persists, it will increase import costs, subsidy burdens and broader economic pressure,” he said, adding that the situation could also present an opportunity for Bangladesh to prioritise renewable energy.
He urged financial institutions to increase investments in solar and other clean technologies.
Mohammad Tamim, vice-chancellor of Independent University, Bangladesh, warned that prolonged disruption in the Strait of Hormuz could place significant strain on the country’s gas supply system.
Bangladesh’s main LNG suppliers are Qatar and Oman, he said. If the crisis continues for more than two weeks, gas supply could become unstable. Losing around 900 million cubic feet of LNG per day would severely disrupt industries and power plants, he added.
Shafiqul Alam, lead analyst for Bangladesh energy at IEEFA, said the government may have to ration gas and electricity if the crisis drags on.
Spot LNG prices exceeded $15 per MMBtu on March 2, and Bangladesh may scale back purchases from the spot market if prices climb further, he said.
At the same time, Brent crude prices have risen to around $82 per barrel. As Bangladesh’s long-term LNG contracts are linked to Brent prices, both oil and LNG import costs are likely to increase.
Zakir Hossain Khan, chief executive of Change Initiative, said a large share of Bangladesh’s LNG imports—particularly from Qatar—passes through the Strait of Hormuz.
Any disruption or global price spike would raise import costs, increase power generation expenses and put additional pressure on industries, he said.
International experts also warned that the crisis underscores the strategic risks of excessive dependence on fossil fuels.
Sam Reynolds, LNG and gas research lead for Asia at IEEFA, said that just four years after Russia’s invasion of Ukraine, Asian economies reliant on imported fossil fuels are once again facing sharp market volatility.
Within days of the latest conflict, prices of oil, LNG and coal have already increased across Asia, he said, adding that countries such as Pakistan, India and Bangladesh are among the most exposed.
“The situation clearly shows the urgency of shifting toward domestic and clean energy sources,” Reynolds said, noting that the costs of renewable technologies such as solar, onshore wind and battery storage have declined steadily over the past decades.
Li Shuo, director of the China Climate Hub at the Asia Society, said moving away from fossil fuels is not only sound climate policy but also essential for national security.
Jan Rosenow, professor of energy and climate policy at the University of Oxford, said developing domestic clean energy sources is the most effective way to shield economies from volatility in global energy markets.
Energy analysts noted that Bangladesh has significant potential in solar power, particularly rooftop systems that can be deployed relatively quickly and help ease pressure on the power system during supply disruptions.
Expanding renewable energy capacity and improving energy efficiency could help Bangladesh build a more resilient and less import-dependent energy system in the long run, they added.
