Ctg Correspondent:

Since the outbreak of war in the Middle East, global fuel prices have risen. Due to Bangladesh’s dependence on imports, the impact is now being felt in the country as well.

This month, Bangladesh Petroleum Corporation (BPC) is suffering an additional cost of approximately Tk 3.3 billion for two diesel-laden ships arriving in the country. Overall, the total additional expenditure on fuel imports has increased by nearly Tk 10 billion compared to previous levels.

Although the government has started purchasing fuel at higher prices, domestic prices of diesel, octane, and petrol—except for jet fuel—have not yet been increased.

As a result, transport, industry, and production sectors have not yet faced major direct impacts. However, if fuel prices are raised, transport costs and production expenses will increase, placing pressure on the entire economy.

Before the war, BPC had been making profits from fuel sales. In the last fiscal year, the corporation earned around Tk 40 billion in profit. For instance, it was making a profit of Tk 1–2 per litre of diesel and Tk 3–4 per litre of petrol and octane.

After the recent price surge, officials claim BPC is now incurring a loss of Tk 68–69 per litre on diesel. Under these circumstances, it remains undecided whether the government will provide subsidies or adjust consumer prices to absorb the additional costs.

When contacted, State Minister for Power, Energy and Mineral Resources Anindya Islam told   that rising international oil prices are increasing import costs, which will put pressure on the overall economy. At the same time, the government is also being forced to purchase fuel from the open market at higher prices.

Meanwhile, speaking at an event in Thakurgaon last Monday, BNP Secretary General and Local Government Minister Mirza Fakhrul Islam Alamgir warned that the coming days will not be easy. Due to the war, oil prices will rise, commodity prices will also increase, and the country will have to endure this pressure moving forward.

The current war situation in the Middle East began on 28 February, following airstrikes by the United States and Israel on Iran. The conflict escalated with retaliatory attacks. After Iranian forces declared the closure of the Strait of Hormuz—the main route for oil supply from the Middle East—global oil prices began to rise rapidly.

According to BPC data, on 27 February, the international price of diesel was $88.44 per barrel. By last Monday, it had risen to $236.60 per barrel, an increase of about 167 per cent. During the same period, octane prices rose from $78.39 to $163.71 per barrel—an increase of about 108 per cent. Jet fuel prices climbed from $89.40 to $228.40 per barrel, an increase of around 155 per cent. Ships carrying fuel at these higher prices will continue to arrive next month.

Tk 10 billion extra cost for 6 ships

BPC purchases fuel based on the price index of Singapore-based pricing agency Platts. The price per barrel is determined by averaging the prices of two days before, the day of loading, and two days after the shipment date. As a result, sharp increases in global prices are quickly reflected in import costs.

According to BPC estimates, on 16 March, approximately 203,126 barrels of diesel were imported aboard the vessel MT Chang Hang Hong Tu. Before the war, the estimated cost of this shipment was around Tk 2.63 billion.

However, due to rising global prices, the actual cost rose to approximately Tk 4.25 billion—an additional Tk 1.62 billion for a single ship. The per-barrel price of diesel stood at $170.99.

A similar situation occurred with another vessel, MT Rafals Samurai, which arrived on 14 March carrying around 200,000 barrels of diesel. The estimated pre-war cost was also around Tk 2.63 billion, but the final cost rose to approximately Tk 4.31 billion—an additional Tk 1.68 billion.

BPC officials say that since the war began, seven ships carrying diesel and one carrying furnace oil have arrived in the country. At least six of these shipments incurred additional costs, with the total extra expenditure exceeding Tk 10 billion.

Jet fuel prices rise domestically

Yesterday, the Bangladesh Energy Regulatory Commission (BERC) raised jet fuel prices for the second time in a month. After an initial increase of Tk 17 per litre at the beginning of the month, prices have now risen by an additional Tk 90.

For domestic flights, jet fuel now costs Tk 202.29 per litre, up from Tk 112.41 previously. Last month, the price was Tk 95.12. For international flights, the price per litre has been increased from $0.7384 to $1.3216.

Diesel accounts for the largest share of fuel consumption in Bangladesh, meeting about 63 per cent of total demand. In the 2024–25 fiscal year, diesel demand was approximately 4.3 million tonnes, of which about 80 per cent was directly imported.

The remainder was refined from imported crude oil. Diesel is widely used in irrigation, road transport, industry, and power generation, yet it is still being sold at previous prices in the domestic market.

Need for short-term planning

Experts suggest that since BPC has made significant profits in recent years, it should partially absorb the additional costs using those earnings. If necessary, the government could reduce foreign expenditures in other sectors to provide subsidies for fuel imports.

Khondaker Golam Moazzem, Research Director at the Centre for Policy Dialogue (CPD), told   that both the government and the public need to cut luxury or non-essential spending. A clear rationing system should be introduced immediately to ensure priority-based fuel supply to critical sectors.

He also believes that in the current volatile situation, entering into long-term energy contracts with any country or entity would not be advisable. The market is changing daily due to the war. Therefore, adopting a short-term planning horizon of about three months would be more realistic.