Global energy markets are jittery as escalating tensions involving the United States and Iran stoke fears of a sharp spike in oil prices, a development that could weigh heavily on import-dependent economies like Bangladesh and its vital textile and apparel sector.
While no confirmed supply disruption has occurred, benchmark Brent crude has climbed above $72 per barrel and Murban crude reached $74.24, reflecting a significant geopolitical risk premium, according to OilPrice.com. Analysts warn that if Gulf shipping through the Strait of Hormuz — a chokepoint for roughly 20 million barrels of oil per day — is threatened, prices could surge further, potentially breaching $90–$100 per barrel.
Bangladesh’s vulnerability is structural. The country imports nearly all of its crude oil and much of its liquefied natural gas. Data from the Bangladesh Bank show fuel imports account for roughly 15–18% of total annual imports. Economists estimate that a $10 per barrel rise in global crude prices could increase the country’s energy import bill by approximately $900 million annually, while a $20 jump could push additional costs to around $1.8 billion.
The textile and ready-made garment (RMG) sector, which contributes more than 80% of Bangladesh’s export earnings according to the Export Promotion Bureau, is particularly exposed to energy cost shocks. Production across spinning, dyeing, and finishing processes is heavily energy-intensive, relying on gas-fired boilers, grid electricity, and diesel generators for backup. Industry estimates indicate energy accounts for 12–18% of costs in spinning mills and 8–12% in composite garment factories.
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Higher oil prices can have a cascading impact. LNG and fuel oil price increases push up electricity generation costs, while synthetic fibre prices, such as polyester, are closely tied to crude benchmarks. Freight costs, heavily influenced by bunker fuel prices, could also rise, eroding Bangladesh’s competitiveness in major markets like the United States and Europe.
Policy and macroeconomic implications are significant. A swelling import bill increases demand for dollars, tightening foreign exchange liquidity. While a weaker taka can theoretically support exports, much of the RMG sector’s raw material — including cotton, chemicals, and man-made fibres — is dollar-denominated, offsetting some gains. Bangladesh’s petroleum reserves cover only 35–45 days of consumption, providing limited cushioning against supply shocks.
OPEC+ is reportedly considering a temporary output surge of up to 411,000 barrels per day to ease market fears, though analysts warn that markets remain volatile as long as U.S.-Iran tensions persist. Even the fear of disruption alone has already raised risk premiums, influencing shipping, insurance, and investor sentiment.
For now, the oil surge remains a potential risk rather than a confirmed shock. But with geopolitical tensions escalating and energy markets highly reactive, Bangladesh’s import-dependent economy and cost-sensitive textile and apparel sector remain particularly vulnerable, underscoring the importance of energy diversification and efficiency measures in the near term.
