Bangladesh’s energy security: Iran-Israel War stalls LPG shipments

Bangladesh's energy sector may come under significant threat if the Iran-Israel war escalates and Iran follows through on its threat to block the Strait of Hormuz, a vital maritime trade route through which one-fifth of the world's oil supply is shipped every day.

The Strait of Hormuz lies between Oman and the UAE on one side and Iran on the other. It links the Persian Gulf with the Gulf of Oman and the Arabian Sea beyond.

Bangladesh imports essential fuels, such as crude oil, liquefied petroleum gas (LPG), and liquefied natural gas (LNG), primarily from Middle Eastern countries, including Saudi Arabia, the UAE, Qatar, Oman, Kuwait, Iraq, and Bahrain.

"Our LPG-laden vessels are waiting at loading ports in Iraq, UAE, Qatar and Oman," said Mohammad Amirul Haque, president of the LPG Operators Association of Bangladesh.

But due to the Iran-Israel war, none of them could pass through the Strait of Hormuz.

"This could trigger an LPG shortage in the country. Despite being a neutral party, we may end up suffering from the consequences of the war," he said.

Bangladesh imports about 1.8 million tonnes of LPG annually through private operators. Around 12 companies are currently importing and distributing LPG, with a monthly demand of approximately 150,000 tonnes.

Meanwhile, a crude oil tanker departed from Saudi Arabia's Ras Tanura port on June 15 and is scheduled to arrive in Bangladesh's maritime boundary by Tuesday.

Another shipment carrying 100,000 tonnes of crude oil is expected to depart from the Jebel Dhanna port in Abu Dhabi on July 8 or 9 passing through the Strait of Hormuz, according to Bangladesh Petroleum Corporation officials.

"If the conflict prolongs or the Strait of Hormuz is closed, fuel imports could face serious setbacks," BPC Chairman Md. Aminul Ahsan told The Daily Star.

Iran's Supreme National Security Council must make the final decision to close the strait, Iran's Press TV said on Sunday, after parliament was reported to have backed the measure.

However, the decision to close the strait is not yet final, as parliament has not ratified a bill to that effect.

"The rapid price increase in the global market is also worrying us," Ahsan said.

Washington's decision to join Israel's attacks on Iran has spurred forecasts of oil surging to $100 a barrel.

Both Brent and West Texas Intermediate crude hit fresh five-month highs on Monday in choppy trade as investors weighed the potential risks to supply.

Shipping rates for supertankers, which can carry 2 million barrels of oil, have also soared, more than doubling in a week to over $60,000 a day, reports Reuters.

"We are concerned about the situation in the Middle East since our energy sector heavily relies on it. We are closely monitoring developments in the region and maintaining constant communication with our suppliers to ensure the supply chain remains uninterrupted," said Zahidul Hasan, chief executive officer of BM Energy BD.