Bangladesh faces mounting challenges in securing a stable and affordable energy supply amid heightened geopolitical tensions and rising global fuel prices, underscoring the need for a comprehensive national energy strategy. The disruption stems from the conflict triggered by US-Israeli strikes on Iran in February 2026, which severely impacted shipping through the Strait of Hormuz, a critical energy transit route. This has led to supply constraints and increased costs for liquefied natural gas (LNG), a key imported fuel used to meet Bangladesh’s growing energy demand.

Since April 2026, Qatar, a major LNG supplier, invoked force majeure on contracts, exacerbating shortages. Diesel reserves fell below a ten-day supply, prompting fuel rationing. By mid-September, Bangladesh was paying nearly $30 per million British thermal units (MMBtu) for spot LNG, nearly triple the pre-war rate. Analysts project that the country’s annual energy import bill, which stood around $12 billion, could increase by as much as 40 percent if elevated prices persist. The government’s energy ministry forecasts LNG subsidies rising to nearly Tk 40,000 crore this year—almost three times the previous year—with electricity subsidies also expected to climb to Tk 50,000 crore. Consumers experienced a retail electricity price increase of 16.68 percent in June, further reflecting the financial strain.

The core of Bangladesh’s energy dilemma lies in its heavy dependence on imported fossil fuels amid declining domestic gas production, which has decreased by approximately 30 percent over the past six fiscal years. Domestic gas output currently covers about 42 percent of demand—1,620 million cubic feet per day against an estimated need of 3,860 million cubic feet per day—leaving a significant shortfall met largely by imported LNG. Supply is further concentrated, with nearly half of domestic production stemming from a single gas field in Habiganj.

Geographically, Bangladesh’s imports are heavily dependent on the Middle East, which supplied roughly two-thirds of its LNG, LPG, and crude oil between January 2025 and March 2026. This regional concentration increases vulnerability to supply shocks that simultaneously affect energy costs and remittance inflows, the latter accounting for nearly half of the country’s foreign earnings of over $30 billion last fiscal year. Physical supply chains are also at risk; all LNG imports are funneled through two floating terminals in Moheshkhali, which have faced multiple disruptions in recent years due to cyclones and technical issues, impacting national energy availability and economic activities such as irrigation during critical agricultural seasons.

Comparatively, other countries have taken measures to mitigate such risks. For instance, Japan maintains mandatory fuel stock reserves covering 45 days of consumption, while India’s strategic petroleum reserve currently meets about nine and a half days. Bangladesh lacks formal strategic reserves, leaving it exposed to supply interruptions. Experts recommend instituting a legal mandate for the Bangladesh Petroleum Corporation to maintain 90 days of fuel stock as storage capacity increases.

In terms of diversification, Bangladesh’s power imports remain minimal and underdeveloped, with just 40 megawatts received from Nepal seasonally and pending approval for more from India hampered by transmission constraints. Advocates suggest pursuing a dedicated transmission corridor with Nepal and engaging in regional power trading arrangements involving Bhutan, India, and Nepal to reduce energy dependence and support the government’s South Asian regional cooperation objectives.

Efforts to increase domestic offshore gas exploration are seen as critical. Bangladesh’s Offshore Bidding Round 2026 aims to attract investment for 26 exploration blocks, with significant reforms urged to facilitate approvals, enhance data transparency, and encourage participation from local entities such as Bapex to retain technical expertise. On the supply side, the recent agreement for 117 U.S. LNG cargoes through 2038 marks a step toward diversification. However, industry voices stress the need for diversified long-term contracts that limit Middle Eastern volumes to half of annual imports, include supplier substitution clauses, and establish transparent tendering processes for spot purchases.

Infrastructure development is also a priority, with the government accelerating plans for a third floating terminal at Kutubjom. Experts caution that the success of such expansions is crucial to accommodate diversified LNG supplies and improve resilience.

To coordinate these complex challenges, proposals call for creating an energy security council under the Prime Minister’s Office, comprising ministries responsible for energy, finance, foreign affairs, and expatriates’ welfare. This body would conduct regular stress tests simulating closures of the Strait of Hormuz and publicly release findings to enhance preparedness.

Bangladesh’s recent energy crisis echoes lessons from previous global shocks, such as the 2022 Russia-Ukraine conflict, which caused fuel price spikes and power shortages worldwide. While major economies may adjust abruptly to shifting circumstances, Bangladesh’s long-term contracts and limited infrastructure lock in supply choices, underscoring the need for thoughtful, coordinated policy responses to safeguard its energy future and economic stability.