The far-reaching fallout from the ongoing conflict in the Middle East has directly hit Bangladeshi households and the national economy. Rising fuel prices, severe gas shortages, collapsing fertilizer production, and mounting inflation have exposed transport, agriculture, healthcare, and manufacturing sectors to severe vulnerabilities.
A World Bank assessment released in mid-June warns that if this crisis persists, approximately 600,000 people in Bangladesh risk losing their jobs. Furthermore, progress for a significant population expected to rise out of poverty this year will be severely disrupted.
Bangladesh relies on natural gas for over half of its primary energy. Structural deficits combined with global supply shocks have crippled the sector:
Import Dependency: Bangladesh imports 60–65% of its crude oil and 55–60% of its Liquefied Natural Gas (LNG) from the Middle East.
Force Majeure: Global supply instability led to force majeure declarations on 5 out of 6 Petrobangla LNG supply contracts.
Spot Market Spikes: Spot LNG prices surged to $24–$28 per MMBTU, more than double historical averages.
Depleting Reserves: Domestic gas field production has fallen by 15% relative to 2016 peak levels.
With nearly 40% of the population reliant on agriculture, international supply disruptions threaten food production:
Factory Closures: 5 out of 6 state-owned urea fertilizer factories suspended operations due to gas shortages.
Surging Inputs: Global urea prices have jumped 30%, with the World Bank warning prices could double if the crisis drags on.
High Chemical Reliance: Bangladesh uses an average of 391.9 kg of fertilizer per hectare (more than double the global average), leaving smallholder farmers highly exposed to import delays.
Power rationing and fuel inflation have strained essential medical operations nationwide:
Rising Operational Costs: Major government hospitals face monthly electricity bills of $600,000 to $1,100,000 each. Private facilities face soaring diesel expenses to run backup generators.
Import Bottlenecks: Over 90% of medical equipment and raw materials for 250 domestic pharmaceutical firms are imported, driving up healthcare and medicine costs via elevated freight rates.
Outbreak Management: Containment efforts for ongoing measles outbreaks since March are hampered by tight fiscal constraints.
Policymaker Responses & Expert Analysis
Government Position: Finance and Planning Minister Amir Khosru Mahmud Chowdhury stated that inflation dropped below 9% in July, noting it would have eased further without the Middle East conflict. He added that inherited structural challenges cannot be resolved overnight and that the government is seeking ways to expand domestic LNG processing capacity.
Expert Evaluation: Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), noted that factory gas disconnections, reduced working hours, and industrial layoffs are already occurring, validating the World Bank’s warnings.
