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Though price of oil in the global market has not so far gone through the roof since Israel's June 13 attack on Iran followed by the latter's retaliatory missile and drone strikes, there is no guarantee that it will remain so in the coming days. It's already unstable. Overall, the price of crude oil rose by 4.0 per cent over the week. But in case, the conflict spirals out of control and Iran blocks the Strait of Hormuz, it is hard to say where it would finally end up. If the US enters the scene and starts a bombing campaign on Iran to what it says destroy Iran's nuclear facilities and Iran blocks the Strait of Hormuz in retaliation, the oil price may even shoot up to US$150 a barrel, some experts fear. In that case, countries that depend completely on imported energy including oil and Liquefied Natural Gas (LNG) are going to be at the receiving end. Definitely, Bangladesh with its economy trying hard to recover from the ashes it had been reduced to during the long period of autocracy till August last year, will find it real hard to stand on its feet again. In this connection, the Power, Energy and Mineral Resources Adviser Muhammad Fouzul Kabir told the media some days back, when the tension in the region was escalating, that though Bangladesh was in a vulnerable position as its energy security is dependent on imports, there is no question that the country would be 'in trouble'. However, he still believed that the situation (relating to Iran-Israel conflict) would not go out of control. Even if the price of oil increases by Tk 18 to Tk 20 per litre, the economy would be able to 'absorb the shock', he assured. Clearly, the reason for his relative calm about the country's energy security in the face of any flare-up between the two arch enemies in the Middle East is that Bangladesh earlier in May purchased oil for consumption in the June-July period.
However, the latest developments in the Middle East, to all appearances, show no reason to be complacent. The ongoing strikes and counterstrikes on each other's strategic infrastructures point to something more sinister in the making than one would like to believe. For the US and its Western allies are solidly behind Israel and they would protect Israel at all costs. Here lies the crux of the matter. This is a do or die situation. The oil rich Gulf Arab States lie at the epicentre of the conflict and are the prime target of either party in the war. If oil and natural gas infrastructures of the Gulf region are attacked by either party, energy supply in the entire world will be disrupted for an indefinite period. How does Bangladesh, an energy-starved nation, hope to survive for long in such a situation? Smooth and dependable supply of fossil energy is still the backbone of the world economy. The six months' oil deal from July to December that Bangladesh has reached with its suppliers in the Gulf, is not enough to protect us indefinitely. To be frank, given the volatile political situation in the oil producing region of the Middle East, which is not improving but worsening by the day, Bangladesh's dependence on this region for its energy supply in the long term cannot be a viable option. Had the leadership of the country been forward-looking, the country would meanwhile have developed its alternative sources of energy long since. The 'If-not' approach to energy issue when its source of supply is the Gulf countries, or the diplomatic language that 'we would be monitoring the market' situation' is no sustainable positions to make when it is a question of survival of the economy. It is also not purely about energy supply. We have to be mindful also of the fact that a major source of the country's hard currency in the form of remittance comes from the migrant workers, who are basically unskilled, staying in the Muddle East. If the entire Gulf region is embroiled in a protracted conflict, the migrant workers will become the first victim of the development. Hundreds of thousands of migrant workers would then return home. That would create an added burden on the economy until an alternative destination for their employment is found. As it is with the mainstay of the country's export, the other major source of foreign exchange, which is dependent on a single type of commodity, the apparel products, so is it with the energy source. It's a one-road to the nation's energy security and foreign exchange earning. Experts including Professor Mustafizur Rahman, a distinguished fellow of a local think tank, the Centre for Policy Dialogue (CPD), held that oil price surge in the global market would leave a very negative impact on the trade balance and current account balance in the eventuality of a sustained after-effect of the energy price escalation. The shipping routes for trade of energy and other vital commodities in the Persian Gulf, the Gulf of Aden, the Red Sea and the Mediterranean Sea if severely disrupted, costs of import and export would escalate. Bangladesh is a nation heavily dependent on import of its energy, industrial raw materials and food. The country's export, too, depends on the undisturbed shipping routes through the international waters. But Bangladesh with its present level of forex reserves can hardly foot the bill for about four months' import. That means, it cannot sustain for long once import costs of its vital supplies rocket up and remain so indefinitely. However, economies with sound reserves or developed industrial base can sustain longer in that situation. Obviously, Bangladesh does not fall in that category.
The maritime routes, especially in the Red Sea, the Gulf of Aden and the Mediterranean have been facing uncertainties since the Houthi rebels of Yemen started their attacks on merchant or military vessels friendly to Israel since October 2023. But politicians in power then and now have remained clueless or too engaged otherwise to prepare the nation for such an emergency. In fact, no excuse is enough to justify the failures to take early steps to meet such existential emergencies.
The interim government should look for alternative sources of oil and LNG in other parts of the world, preferably in the East, that are not as dicey as the Middle East. Such steps are also required for its exports and markets for migrant workers.