Tensions in the Middle East have sharply escalated after Israel’s surprise airstrikes on Iranian nuclear and military facilities on June 13, killing several top generals and scientists. Iran responded with missile attacks on Israeli territory, followed by US airstrikes on three Iranian nuclear sites on June 22. With deep economic and strategic ties to the region, Bangladesh now faces growing concerns over energy security, trade disruptions, and remittance inflows as fears of a prolonged conflict mount.

Energy Price Shock Likely

Bangladesh’s economy is heavily dependent on imported fuel. A sharp hike in global oil and gas prices—especially if the Strait of Hormuz, a vital global oil shipping route, is blocked—could severely impact energy supply and costs.

Roughly 20% of the world’s oil supply (about 21 million barrels per day) passes through the Strait of Hormuz. Previous conflicts, such as the 1973 Arab-Israel war or the 2017 drone attacks on Saudi oil facilities, triggered major disruptions and price spikes. Bangladesh imports most of its LNG from Qatar and Oman, both of which rely on this strategic waterway for exports.

Dr Subrota Kumar Saha, Professor and Chairman of the Geology Department at Dhaka University, told Banglanews, “Oil prices have already started rising globally. If the Strait of Hormuz is closed, the situation will be terrible. The longer this war continues, the more adverse the impact will be for us.”

Asked about mitigation steps, Dr Saha said, “We should expand our oil storage capacity. Currently, we can only store for about 45 days. If we could increase this to three or four months, that would provide some protection during such crises.”

Trade and Export Under Threat

Bangladesh’s economy is significantly reliant on exports, particularly the ready-made garments (RMG) sector, which contributes more than 80% of the country's total export earnings. A prolonged Middle East conflict could disrupt major shipping routes, causing delays, increased freight charges, and potential loss of buyers.

Remittance at Risk

The Middle East remains the primary destination for Bangladeshi migrant workers. Although Iran and Israel host relatively few Bangladeshis, any spillover into major Gulf economies like Saudi Arabia, the UAE, Oman, or Qatar could have far-reaching consequences.

Bangladesh Bank Executive Director and spokesperson Md. Arif Khan told Banglanews, “The Iran-Israel war isn’t affecting expatriate income at this moment. But if the war spreads to other Middle East countries, then it will become a concern.”

He added, “We’ll be alarmed if this expands to countries like Saudi Arabia, Oman, Dubai, Qatar, or Kuwait — where a large number of Bangladeshi workers are employed. If businesses shut down and workers lose jobs, our remittance inflow will undoubtedly suffer.”

BAIRA (Bangladesh Association of International Recruiting Agencies) Vice President Reaz-ul-Islam echoed this concern. “If the war drags on, it will be disastrous for Bangladesh,” he said, recalling how over 40,000 Bangladeshi workers had to be rescued by the International Organization for Migration (IOM) during the Libya conflict. “If something similar happens again, the impact would be catastrophic.”

Reaz also highlighted the broader implications of any disruption at the Strait of Hormuz. “A large volume of our imports and exports depend on that route. And since many Bangladeshi workers are employed in that region, the overall impact would be significant.”

Airspace Restrictions and Flight Rerouting

Following Israel’s airstrikes, real-time tracking platform Flightradar24 observed a significant drop in the number of flights passing over Iranian airspace, as commercial airlines began rerouting to avoid conflict zones.

While Bangladeshi carriers do not frequently fly over Iran, Civil Aviation Authority of Bangladesh (CAAB) Member (Operations & Planning) Air Commodore Abu Sayeed Mehboob Khan told Banglanews, “So far, no Bangladesh-bound or originating flights have been affected. Changes in flight schedules will depend on how the conflict unfolds, but ticket fares are regulated by airline companies.”

He added, “The European Union has already issued warnings and advised Iran- and Jordan-bound passengers not to travel beyond UAE without updates.”

Economic Forecast: Growth at Risk

Dr Muhammad Shahadat Hossain Siddiquee, Professor of Economics at Dhaka University, warned that the Middle East conflict may derail global and domestic economic recovery.

“The world still depends heavily on oil, and Iran alone holds 10–12% of global reserves. If oil prices rise, inflation will spike further,” he told Banglanews.

He added, “Institutions like the World Bank, IMF, and ADB had forecast modest global GDP growth, but this crisis may prevent the world from reaching those targets. Tighter conditions around the Hormuz Strait will only worsen that outlook.”

On domestic consequences, Prof. Shahadat said, “Our production system is oil-dependent. If fuel prices rise, production slows, GDP declines, and unemployment increases. Bangladesh is already struggling with inflation above 9%, which is dangerously high compared to other South Asian economies.”

He also warned that if the United States joins the war, the dollar could become stronger, leading to further depreciation of the taka. “This would add pressure on our foreign exchange reserves and possibly shrink export earnings. The crisis could spiral.” 

Prof. Shahadat advised Bangladesh to urgently diversify its energy sources and consider strategic oil reserve partnerships. “We must explore futures trading agreements and diversify our suppliers. Relying too heavily on any one route or region is a strategic risk.”

Uncertainty in Foreign Policy and Global Trade

The Iran-Israel conflict is unfolding at a time when global trade is already under strain from protectionist policies. US President Donald Trump's renewed tariff campaigns have impacted investor sentiment and raised trade costs globally.

A H M Masum Billah, Director of Public Diplomacy at the Ministry of Foreign Affairs, told Banglanews, “Bangladesh is closely monitoring the evolving situation in the Middle East. The ministry has already issued an official statement regarding this.”

Asked about the status of Bangladeshi students in Iran, he replied, “There is no update on that. As for our position, it has been shared publicly through a press briefing.”

Fuel Supply Still Stable — For Now

An official from the Ministry of Energy, Power and Mineral Resources, speaking on condition of anonymity, said, “We have no fuel crisis yet. We are maintaining regular communication with our main suppliers, Qatar and Oman.”

He said that Bangladesh’s long-term energy contracts are still intact. “If our suppliers fail to deliver, they are accountable under contract terms. As of now, we haven’t received any negative indications from the Middle East.”

Regarding spot-market purchases, the official said, “That’s a separate mechanism. We can procure from the US or other countries if needed. The current situation has not yet forced us into emergency buying.”

With oil prices rising and war risks intensifying, Bangladesh’s economy, however, faces potential headwinds. Energy security, export stability, remittance inflows, and inflation control may all come under pressure. 

Policymakers are urged to remain vigilant, diversify sources, and strengthen crisis preparedness to protect the country's economic momentum in a volatile global climate.

MSK/