DHAKA, March 8, (V7N) - Escalating conflict in the Middle East could deliver significant economic shocks to Bangladesh by raising global energy prices, increasing import costs and weakening export competitiveness, according to a new report released Sunday by the Policy Research Institute (PRI).

The report, Bangladesh Monthly Macroeconomic Insights (January–February 2026), warns that geopolitical instability — particularly risks to global oil supply — poses immediate and medium‑term threats to Bangladesh’s fragile economic recovery.

PRI noted that Bangladesh remains highly vulnerable to global energy price volatility due to its heavy reliance on imported fuel. The country’s annual energy import bill already stands at around $12 billion.
Oil Price Surge Could Deepen External Pressures

According to PRI’s estimates:

A $10 per barrel rise in global oil prices would increase Bangladesh’s import bill by about $900 million.

A $20 increase would raise costs by nearly $1.8 billion.

Following the latest escalation, Brent crude climbed to around $92 per barrel, up 42% from the pre‑war level of $65. European LNG prices have surged nearly 70%, the report said.

Higher energy prices would increase Bangladesh’s demand for US dollars, putting pressure on the exchange rate and potentially reducing foreign exchange reserves.
Strait of Hormuz a Critical Risk Point

The report highlights the strategic importance of the Strait of Hormuz, through which roughly 20% of global oil trade passes. Any disruption caused by the Iran–US conflict could trigger a severe global supply shock.

In an extreme scenario, global oil prices could rise to $130 per barrel or more, sharply increasing production and transport costs worldwide. PRI warned that Bangladesh might be forced to impose energy rationing for industries, affecting output and growth.
Exports Already Under Pressure

The think tank cautioned that the conflict could weaken global growth and reduce demand for Bangladesh’s exports, particularly ready‑made garments.

A 20–30% rise in oil prices could reduce global economic growth by up to one percentage point, affecting key export markets. Bangladesh’s export earnings have already fallen 3.15% year‑on‑year to $31.9 billion during July–February of FY26.
Fragile External Sector Faces New Risks

PRI noted that the potential energy shock comes at a time when Bangladesh’s external sector remains fragile.

Foreign exchange reserves have improved to $30.4 billion,

But external debt has risen from $104 billion in FY2024 to $113 billion in FY2025, and is projected to reach $121 billion in FY2026.

Bangladesh’s GDP growth slowed to 3.49% in FY2025, while inflation stood at 8.58% in January 2026.
PRI Calls for Reforms and Diversification

The institute warned that a prolonged Iran–US conflict could further complicate macroeconomic stability by raising inflation, widening the trade deficit and weakening investor confidence.

PRI stressed the need for export diversification, prudent macroeconomic management, and stronger policy reforms to build resilience against global shocks.

END/AJ/RH