MNZGamerX
Registered Member
Moniruzzaman
Australian National University
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In February 2026, Bangladesh formalised a sweeping trade agreement with the United States, committing to purchase US$15 billion in liquefied natural gas (LNG) over 15 years — just weeks before Washington launched military action against Iran. The resulting disruptions in Gulf energy markets left Bangladesh paying elevated prices for rerouted US LNG, while limiting its diplomatic flexibility and transferring the economic consequences of the conflict onto its population.
Bangladesh is structurally vulnerable to international fossil fuel market disruptions. It imports approximately 95 per cent of its oil and fuel requirements. Its primary energy imports have also risen sharply, from 47.7 to 62.5 per cent of supply between 2020–21 and 2024–25. Any disruption in global fossil fuel markets immediately increases the fiscal burden. The February deal, layered on top of a 2023 LNG supply contract, deepened that reliance, concentrating Bangladesh’s energy security in one dominant supplier.
The economic consequences became apparent immediately. After Iranian attacks on energy infrastructure, QatarEnergy, one of Bangladesh’s three long-term LNG suppliers, suspended deliveries under force majeure. Its two other main suppliers, OQ Trading and Excelerate Energy, soon followed, leaving Bangladesh without any contracted LNG supply. Spot market prices surged from about US$10 per million metric British thermal units (MMBtu) in January to US$28.28 per MMBtu by mid-March. When the state-owned Petrobangla issued its first emergency tender on 1 March, it drew no bids, with traders deeming Bangladesh a high-risk market. Officials projected losing 40 of the 115 LNG cargoes scheduled for 2026.
In response to the collapse in energy supply, Bangladesh scrambled for alternative sources. Russian diesel emerged as the most viable lower-cost option, but required US approval. Dhaka formally requested a temporary US sanctions waiver, similar to the exemption previously granted to India for up to 600,000 tonnes of Russian diesel. The US granted a 60-day waiver, after Bangladesh had been unable to benefit from an earlier, narrower exemption covering Russian oil already at sea.
US energy has replaced previous suppliers, but at a higher cost. US liquefied petroleum gas (LPG) accounts for 62 per cent of Bangladesh’s LPG imports, up from 22 per cent two months earlier, driven largely by private-sector importers switching sources. Amirul Haque, President of the LPG Operators Association of Bangladesh, has said that the US is likely to remain the dominant supplier and that trade agreements — including the February 2026 trade deal — could increase imports from the US further. With shipments rerouted around the Cape of Good Hope to avoid the Gulf, adding 10 to 20 days to delivery, costs have risen further still.
Bangladesh’s dependence has also narrowed its diplomatic autonomy. It officially condemned Iranian retaliatory strikes but did not directly criticise US or Israeli actions, prompting Iran to express disappointment with Dhaka’s statement. Bangladesh’s reliance on US LNG, the need for US approval to purchase Russian oil and its pursuit of IMF financing together leave Dhaka with little room to pursue a principled foreign policy position.
Ordinary Bangladeshis have borne the economic consequences. By early March, diesel reserves dropped to just nine days of supply, forcing rationing across the economy. Four out of five state-owned urea fertiliser factories closed during the Boro rice season. Household budgets fell too — the price of a 12.5-kilogram LPG cylinder rose from 900 Bangladeshi taka (Tk 900, or US$7.50) to Tk 1500 (US$12.30), while the monthly minimum wage stayed fixed at Tk 12,500 (US$102).
After spending Tk 50 billion (US$407 million) on fuel subsidies in March, the government raised retail fuel prices by 10 to 16.6 per cent on 19 April. Headline inflation reached 9.13 per cent in February 2026 and foreign exchange reserves fell to US$29.39 billion by late March. The garment sector, which generates more than 80 per cent of export earnings, saw production fall 25 to 30 per cent, as gas shortages and power cuts disrupted factory operations. The South Asian Network on Economic Modeling estimates the conflict could reduce Bangladesh’s GDP by up to 3 per cent over two years.
Bangladesh has requested over US$2 billion in emergency financing from the International Monetary Fund, World Bank and Asian Development Bank. It also secured diesel via India’s Numaligarh pipeline — though the initial shipment of just 5000 tonnes was far short of its monthly demand of 380,000 tonnes — as well as spot LNG from Australia and Angola and crude oil from Kazakhstan and Oman. But these actions reflect crisis management rather than proactive planning.
To build resilience against these shocks, Bangladesh must diversify its energy supply through domestic gas exploration, expansion of renewable energy and regional cooperation with India. The outbreak of the Russia–Ukraine war in 2022, Houthi disruptions in the Red Sea and the Iran–US war in 2026 have each exposed the same structural vulnerability. The February 2026 trade deal with the United States did not create these problems, but it has made them harder to solve.
Australian National University
In Brief
Weeks after Bangladesh committed to buy US$15 billion of US liquefied natural gas, the United States went to war with Iran, throwing Gulf energy markets into disruption. With around 95 per cent of its oil and fuel imported, Bangladesh was left paying more for rerouted US energy supplies, seeking Washington’s approval to buy cheaper Russian diesel and constrained in its foreign policy. Building resilience will mean reducing reliance on imported fossil fuels while diversifying supply through domestic gas, renewables and closer cooperation with India.---------------------
In February 2026, Bangladesh formalised a sweeping trade agreement with the United States, committing to purchase US$15 billion in liquefied natural gas (LNG) over 15 years — just weeks before Washington launched military action against Iran. The resulting disruptions in Gulf energy markets left Bangladesh paying elevated prices for rerouted US LNG, while limiting its diplomatic flexibility and transferring the economic consequences of the conflict onto its population.
Bangladesh is structurally vulnerable to international fossil fuel market disruptions. It imports approximately 95 per cent of its oil and fuel requirements. Its primary energy imports have also risen sharply, from 47.7 to 62.5 per cent of supply between 2020–21 and 2024–25. Any disruption in global fossil fuel markets immediately increases the fiscal burden. The February deal, layered on top of a 2023 LNG supply contract, deepened that reliance, concentrating Bangladesh’s energy security in one dominant supplier.
The economic consequences became apparent immediately. After Iranian attacks on energy infrastructure, QatarEnergy, one of Bangladesh’s three long-term LNG suppliers, suspended deliveries under force majeure. Its two other main suppliers, OQ Trading and Excelerate Energy, soon followed, leaving Bangladesh without any contracted LNG supply. Spot market prices surged from about US$10 per million metric British thermal units (MMBtu) in January to US$28.28 per MMBtu by mid-March. When the state-owned Petrobangla issued its first emergency tender on 1 March, it drew no bids, with traders deeming Bangladesh a high-risk market. Officials projected losing 40 of the 115 LNG cargoes scheduled for 2026.
In response to the collapse in energy supply, Bangladesh scrambled for alternative sources. Russian diesel emerged as the most viable lower-cost option, but required US approval. Dhaka formally requested a temporary US sanctions waiver, similar to the exemption previously granted to India for up to 600,000 tonnes of Russian diesel. The US granted a 60-day waiver, after Bangladesh had been unable to benefit from an earlier, narrower exemption covering Russian oil already at sea.
US energy has replaced previous suppliers, but at a higher cost. US liquefied petroleum gas (LPG) accounts for 62 per cent of Bangladesh’s LPG imports, up from 22 per cent two months earlier, driven largely by private-sector importers switching sources. Amirul Haque, President of the LPG Operators Association of Bangladesh, has said that the US is likely to remain the dominant supplier and that trade agreements — including the February 2026 trade deal — could increase imports from the US further. With shipments rerouted around the Cape of Good Hope to avoid the Gulf, adding 10 to 20 days to delivery, costs have risen further still.
Bangladesh’s dependence has also narrowed its diplomatic autonomy. It officially condemned Iranian retaliatory strikes but did not directly criticise US or Israeli actions, prompting Iran to express disappointment with Dhaka’s statement. Bangladesh’s reliance on US LNG, the need for US approval to purchase Russian oil and its pursuit of IMF financing together leave Dhaka with little room to pursue a principled foreign policy position.
Ordinary Bangladeshis have borne the economic consequences. By early March, diesel reserves dropped to just nine days of supply, forcing rationing across the economy. Four out of five state-owned urea fertiliser factories closed during the Boro rice season. Household budgets fell too — the price of a 12.5-kilogram LPG cylinder rose from 900 Bangladeshi taka (Tk 900, or US$7.50) to Tk 1500 (US$12.30), while the monthly minimum wage stayed fixed at Tk 12,500 (US$102).
After spending Tk 50 billion (US$407 million) on fuel subsidies in March, the government raised retail fuel prices by 10 to 16.6 per cent on 19 April. Headline inflation reached 9.13 per cent in February 2026 and foreign exchange reserves fell to US$29.39 billion by late March. The garment sector, which generates more than 80 per cent of export earnings, saw production fall 25 to 30 per cent, as gas shortages and power cuts disrupted factory operations. The South Asian Network on Economic Modeling estimates the conflict could reduce Bangladesh’s GDP by up to 3 per cent over two years.
Bangladesh has requested over US$2 billion in emergency financing from the International Monetary Fund, World Bank and Asian Development Bank. It also secured diesel via India’s Numaligarh pipeline — though the initial shipment of just 5000 tonnes was far short of its monthly demand of 380,000 tonnes — as well as spot LNG from Australia and Angola and crude oil from Kazakhstan and Oman. But these actions reflect crisis management rather than proactive planning.
To build resilience against these shocks, Bangladesh must diversify its energy supply through domestic gas exploration, expansion of renewable energy and regional cooperation with India. The outbreak of the Russia–Ukraine war in 2022, Houthi disruptions in the Red Sea and the Iran–US war in 2026 have each exposed the same structural vulnerability. The February 2026 trade deal with the United States did not create these problems, but it has made them harder to solve.
