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The global economy is heading towards severe disruption as energy prices surge amid the ongoing war involving the United States and Israel.
On 28 February, the price of crude oil in the international market stood at $65 per barrel. Within just 24 days, it has climbed to $120. If the conflict continues for six months, prices could rise to $150 per barrel, and if it persists for a year, they may exceed $200.
Energy remains an indispensable input for most production processes, either directly or indirectly, and no effective alternative has yet been developed. As a result, countries like Bangladesh, which are heavily dependent on imported fuel, are particularly vulnerable. Limited storage capacity also prevents the country from building large emergency reserves.
Earlier, the government had urged citizens to use fuel sparingly, but the situation has not improved significantly. At an emergency meeting chaired by Prime Minister Tarique Rahman on 25 March, the country’s fuel crisis was discussed. Officials acknowledged that the crisis stems from global conditions, but the government is not in favour of a blanket increase in domestic fuel prices at this stage.
Although aviation fuel prices have been raised, general fuel prices remain unchanged. The government has urged the public not to panic. However, reports indicate that some dishonest businessmen are diverting fuel from petrol pumps to the open market, where it is being sold at inflated prices. Long queues have been seen outside petrol stations as consumers scramble to secure fuel.
The war has heightened global concern. The United States and Israel had reportedly expected that targeting Iran’s Supreme Leader Ayatollah Ali Khamenei would trigger domestic unrest leading to regime change. However, the opposite appears to have occurred, with Iran becoming more unified and launching a counter attack.
Unlike previous Iran–Israel confrontations, this conflict has expanded across at least 12 countries in the Middle East. Iran has targeted not only US military installations but also oil fields and refineries across the region, severely disrupting production and supply.
As a result, the global fuel shortage is intensifying. Experts warn that a prolonged conflict could lead to a situation reminiscent of the 1973 Arab–Israeli war, when oil exports were halted and prices quadrupled. A similar crisis was observed in 2008, when prices surged to $148 per barrel, contributing to a global economic downturn.
Following the 2022 Ukraine war, sanctions on Russian oil and reduced production by OPEC countries also triggered a supply crisis. However, the current crisis is more severe, as it involves both transport disruptions and declining production due to attacks on energy infrastructure.
A major bottleneck in the current crisis is the Strait of Hormuz, through which around 20 per cent of global oil is transported. Iran has warned that it will not allow oil tankers from the US or its allies to pass through the strait.
Although some alternative pipelines exist between Saudi Arabia and Iraq, their capacity is limited to 3.5–5.5 million barrels per day, insufficient to meet global demand. The crisis also extends to liquefied natural gas (LNG), with transport through Hormuz effectively halted.
Efforts by the US to mobilise allied naval support to secure the strait have reportedly been unsuccessful, further complicating the supply situation.
Larry Fink, CEO of BlackRock, has warned that if oil prices reach $150 per barrel and remain elevated, it could have dire consequences for global economies. Higher energy costs would increase production expenses and reduce consumer spending, potentially pushing the world into recession.
The duration of the war and the closure of the Strait of Hormuz remain uncertain, making it difficult to predict when global energy markets will stabilise.
Although Bangladesh is not directly involved in the conflict, it is already feeling the adverse effects. The country relies heavily on imported energy, while domestic natural gas reserves are dwi
To meet the crisis, both short-term and long-term strategies are needed. These include exploring new gas fields, increasing extraction from existing reserves, and initiating offshore exploration in maritime areas resolved through international arbitration.
The government is also exploring alternative import sources, including Russia, India, and China. Plans are in place to import 450,000 tonnes of fuel in April, 490,005 tonnes in May, and 430,000 tonnes in June.
Despite rising global prices—diesel has surged from $88.44 to $236.60 per barrel, octane from $78.39 to $163.71, and jet fuel from $89.40 to $228.40—the government has refrained from increasing domestic fuel prices, except for aviation fuel.
Authorities emphasise the need to maintain price stability while ensuring adequate imports. However, fuel procurement and storage remain time-consuming and capacity-limited processes.
Officials maintain that the current situation is temporary and not the result of any policy failure. They have urged the public to remain patient, conserve energy, and support efforts to manage the situation effectively.
The writer is a former Vice-Chancellor of the University of Dhaka, currently Professor Emeritus, and a former Ambassador of Bangladesh to Bahrain.
