Written By: Mr. Lutful Haider, Analyst and a prolific writer, Montreal, Canada. Professor(retd) Omer S. Sher, Economist and Political Analyst on South Asia, Ottawa Canada
A widening conflict involving Iran, Israel, and the United States is sending shockwaves through global energy markets and raising serious concerns for vulnerable economies, particularly in South Asia. Analysts warn that Bangladesh could face significant economic strain as the crisis disrupts fuel supplies, trade routes, and remittance flows.
The escalation began with reported Israeli and U.S. strikes targeting senior Iranian leadership, triggering a swift and forceful response from Tehran. Instead of weakening internal support for the Iranian government, the attacks appear to have consolidated public backing, strengthening the country’s resolve.
Iran retaliated with missile and drone strikes aimed at Israeli and U.S. military assets. Reports indicate that several strategic targets were hit, including infrastructure supporting missile defense systems. Disruptions at major transit hubs, including Israel’s primary international airport, have further highlighted the intensity of the conflict.
Security analysts say the conflict is unlikely to be resolved quickly. Iran’s vast geography, mountainous terrain, and decentralized military command structure make it difficult to defeat through airstrikes alone. As a result, the possibility of a prolonged confrontation remains high.
The most immediate global impact is being felt in energy markets. The Strait of Hormuz, a critical chokepoint for global oil shipments, has been severely disrupted. Thousands of oil tankers are reportedly stranded, as insurers refuse to cover cargo moving through the high-risk zone.
This disruption has already pushed global oil prices sharply higher. Before the conflict, Brent crude was trading at around $72 per barrel. Prices have since surged beyond $100, increasing the cost of fuel worldwide.
For Bangladesh, the consequences could be particularly severe. The country depends heavily on imported energy, including crude oil, refined petroleum, and liquefied natural gas. Rising global prices will directly increase import bills and put additional pressure on foreign currency reserves.
Economists warn that Bangladesh could face multiple economic shocks simultaneously. These include higher inflation driven by rising fuel and transport costs, a weakening currency due to increased demand for foreign exchange, and disruptions in electricity generation caused by energy shortages.
The country’s export-driven economy may also suffer. Increased shipping costs and delays in global logistics networks could slow down trade, particularly in the ready-made garments sector, which remains Bangladesh’s largest source of export earnings.
Another major concern is remittance income. More than 8.6 million Bangladeshis work in Middle Eastern countries, many of which are now directly or indirectly affected by the conflict. If economic activity slows in those regions, job opportunities could decline, leading to reduced remittance inflows—a key pillar of Bangladesh’s economy.
Agriculture is also at risk. Bangladesh relies on fertilizer imports from Gulf countries such as Saudi Arabia, Qatar, and the United Arab Emirates. Any disruption to these supply chains could affect food production and increase pressure on domestic markets.
Global projections suggest the economic fallout could be substantial. Analysts estimate that oil prices could rise by up to 40 percent, LNG prices by 50 percent, and global freight costs by 25 percent. At the same time, global GDP growth could decline by as much as 3 percent, while real wages fall and export growth slows.
The broader geopolitical situation remains volatile. There are growing concerns that the conflict could expand to include additional regional actors, further destabilizing global markets. Strategic infrastructure, including energy facilities and shipping routes, remains at risk.
Experts say countries like Bangladesh must act quickly to mitigate the impact. This includes securing alternative energy supplies, strengthening fiscal management, and maintaining economic stability in the face of external shocks.
At the same time, analysts emphasize the importance of political stability and inclusive governance. In times of global crisis, internal cohesion becomes critical to managing economic challenges effectively.
As the conflict continues to evolve, its economic consequences are already being felt far beyond the Middle East. For Bangladesh and other import-dependent economies, the coming months could prove particularly challenging.
