Illusion of Distance

Major crises rarely become devastating because of a single event. Their real impact depends on the weaknesses already built into a society or an economy. Anyone who reads John Steinbeck’s “The Grapes of Wrath” will see this clearly. The novel follows the Joads, a farming family driven from their land during the Great Depression. Drought begins their hardship, but drought alone does not destroy them. Debt, dispossession and an economic system beyond their control turn hardship into ruin. Bangladesh’s present energy crisis can be read through a similar lens. The Middle East war did not create the country’s dependence on imported fuel. It exposed the risks already embedded in that dependence. On 21 September, the government raised the prices of diesel, petrol, octane and kerosene by Tk20 per litre. Bus fares were then raised by 17 paisa per kilometre. A conflict far from Bangladesh had entered the cost of an ordinary journey. The harder question is not what the war did to fuel prices. It is why the shock travelled to Bangladesh so quickly.

The answer begins with concentration. Bangladesh imports energy from a market that depends heavily on a small number of sea routes. The Strait of Hormuz is the clearest example. Around 20 million barrels of crude oil and petroleum products passed through it each day in 2025. That was about one-quarter of global seaborne oil trade. The strait also carried about 19% of global LNG trade. Bangladesh is especially exposed on the gas side. The International Energy Agency estimates that Bangladesh, India and Pakistan obtained almost two-thirds of their LNG supplies through Hormuz in 2025. Bangladesh Bank gives the domestic side of the picture. Import payments reached $61.62 billion during July-April of FY2025-26, up 5.92% from a year earlier. Petroleum, LNG and fertiliser were among the main sources of the increase. The central bank also linked higher freight and insurance costs to the Middle East war and disruption around Hormuz. Import dependence is therefore only part of the problem. Route dependence matters too. A country may be able to pay for fuel and still face shortages or higher costs when the route carrying that fuel becomes unsafe.

The shock is landing on an economy where prices are already high. Bangladesh’s point-to-point inflation was 8.26% in August. Non-food inflation was 9.32%. The national wage rate index rose 8.05% over the same 12-month period. That index does not measure every household’s income, so it should not be used as proof that all workers lost purchasing power. It does show that the latest energy shock has arrived in a difficult price environment. Fuel costs also spread through the economy in ways that are easy to miss. Diesel affects freight, farm machinery and the movement of industrial inputs. Higher transport costs can appear later in the price of food or manufactured goods. Bangladesh Bank has said that inflation cannot be treated as a demand problem alone. Supply bottlenecks, production costs and weaknesses in market distribution also matter. This is why interest rates have limits. Tighter monetary policy can reduce domestic demand. It cannot reopen a disrupted shipping lane or lower the insurance premium on a tanker crossing a conflict zone. When the source of inflation is partly external, the quality of domestic buffers becomes as important as the price of money.

The Gulf matters to Bangladesh for another reason. It is also a major source of remittance income. Bangladesh received $35.589 billion in official remittances in FY2025-26. Saudi Arabia contributed $5.849 billion, the UAE $4.584 billion, Oman $2.048 billion, Kuwait $1.764 billion and Qatar $1.559 billion. Together, these five economies amounted to about $15.8 billion, or roughly 44% of the annual total. This does not mean the current war will automatically reduce remittances. Bangladesh Bank’s own figures show that remittance inflows were exceptionally strong in FY2025-26. The importance lies in the pattern of exposure. Bangladesh spends foreign currency on energy linked to the Gulf while receiving a large stream of foreign currency from workers based in the same region. These two flows are usually discussed separately. They should also be viewed together. If several parts of an economy depend on the same region, risks can become correlated. Energy security, labour migration and foreign-exchange stability then stop being separate policy files. They become parts of the same question: how much of Bangladesh’s economic security rests on events it cannot control?

That question points towards a different idea of resilience. Bangladesh cannot decide when wars begin. It cannot guarantee that Hormuz will remain open. It can decide how concentrated its energy sourcing is, how much emergency capacity it maintains, and how efficiently fuel is used. It can also decide how relief is distributed when prices jump. The International Energy Agency responded to the 2026 disruption by coordinating the release of 400 million barrels of emergency oil, the largest such action in its history. The World Bank has warned that broad fuel subsidies and tax cuts can become expensive and poorly targeted. Its research argues that temporary assistance aimed at vulnerable households can often deliver more relief for the same fiscal cost. Bangladesh does not need to copy either institution mechanically. Its own institutions and fiscal limits must shape the response. But the principle is difficult to ignore. A crisis is less damaging when a country has choices before it begins. Without those choices, every external shock ends in the same narrow debate: absorb the loss, subsidise the price or pass the cost to consumers. The war may be distant. The dependency is not.
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The writer is an Assistant Professor in the Department of Philosophy at IUBAT and currently on study leave, residing in Oslo, Norway