The ongoing crisis in the Middle East has sent ripples through global energy markets, now directly impacting Bangladesh. According to international research firm Zero Carbon Analytics (ZCA), Bangladesh’s annual energy import bill could surge to $4.8 billion, representing nearly $480 million above previous projections. This figure is estimated to be at least 40% higher than 2025 levels.
Such a dramatic increase in import costs is likely to exert significant pressure on the country’s foreign exchange reserves. Current projections indicate that Bangladesh’s capacity to cover imports could fall from 5.7 months to 4.9 months, signalling growing vulnerability in the nation’s trade balance. Official statistics show that Bangladesh spends roughly $12 billion annually on energy imports.
Projected Economic Impact
ZCA warns that if elevated prices for oil, gas, and coal persist for a year, Bangladesh could face financial losses equivalent to 1.1% of its 2024 GDP. Rising import costs could also trigger currency depreciation, escalate inflation, and increase pressure on the central bank to adjust interest rates. Analysts note that recurring energy crises, such as the price surge during the Russia–Ukraine conflict, underline the country’s overreliance on fossil fuels and delayed transition to renewable energy.
| Indicator | 2023 | 2024–25 | Notes |
|---|---|---|---|
| Energy demand met through imports | 46% | 65% | Electricity generation heavily import-dependent |
| Foreign reserves coverage (months) | 5.7 | 4.9 | Reduced ability to cover imports |
| Annual energy import expenditure | $12 B | $12–$12.5 B | Up to 40% increase vs 2025 forecast |
| Renewable energy contribution | 2% | 2% | Minimal improvement since 2020 |
Much of Bangladesh’s imported energy passes through the Strait of Hormuz, a route now disrupted by regional conflict. Already, a cargo of 100,000 tonnes from Saudi Aramco is stranded in the Gulf. Under long-term agreements with Saudi Aramco and Abu Dhabi National Oil Company, Bangladesh imports around 1.4 million tonnes of crude oil annually through this route.
The country’s heavy reliance on LNG has strained the electricity sector. David Hasanat, president of the Bangladesh Independent Power Producers Association (BIPPA), warns that 23% of the nation’s power plants are currently offline due to gas shortages. The industrial sector has also suffered: four fertiliser factories have shut down, while the ready-made garment (RMG) industry, the nation’s primary export sector, is grappling with daily load-shedding of up to five hours. Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), confirms diesel shortages are compounding the crisis.
Bangladesh’s transition to renewable energy remains minimal. Data from the International Energy Agency (IEA) indicate that only 2% of the country’s energy came from renewable sources between 2020 and 2023, with little improvement in 2024. In response, Bangladesh is investing nearly $50 billion in 41 new LNG-based power plants, projected to add 35 gigawatts—triple the current capacity—further locking the country into LNG dependence.
The current energy crisis highlights the urgent need for Bangladesh to diversify its energy mix, accelerate renewable adoption, and reduce reliance on volatile fossil fuel imports to mitigate both economic and industrial risks.