Iran ceasefire: A sigh of relief for Bangladesh

The announcement of a two-week ceasefire in the
US-Israel war on Iran war came as a welcome respite for Bangladesh, easing
fears of prolonged disruption in energy supply chains and bringing a sharp fall
in oil prices.
For Bangladesh – heavily reliant on Middle
Eastern fuel – the reopening of the Strait of Hormuz, a critical maritime choke
point, has provided immediate operational relief.
With the enforcement of the ceasefire, an Energy
Division official said, a crude tanker loaded with 1 lakh tonnes of fuel is now
en route to Bangladesh after being stranded since 3 March at a Saudi port.
The development comes after weeks of heightened
tension that had stalled shipments, driven up freight costs, and inflicted
uncertainty in the domestic energy market.
The global oil market reacted swiftly. Brent
crude prices dropped by more than 16%, falling to as low as $91.70 per barrel
in early Asian trading on Wednesday (8 April), down from $109.27 the previous
day.
Shipments resume as Hormuz reopens
The most immediate benefit for Bangladesh is the
resumption of delayed fuel shipments.
Speaking to TBS, officials at the Energy
Division said efforts are underway to fast-track the arrival of delayed
shipments and restore normal supply lines.
"The ceasefire brought a sigh of relief for
us as our energy imports are largely dependent on the Strait of Hormuz,"
said Monir Hossen Chowdhury, joint secretary (operation wing) of the Energy
Division.
"We are reaching out to long-term fuel and
LNG suppliers to resume supply at the earliest."
Another tanker carrying a similar volume of
crude is expected to arrive by the last week of April. However, uncertainty
still surrounds a third shipment, after its supplier invoked force majeure amid
the earlier disruption.
Eastern Refinery Limited, which processes around
1.25 lakh tonnes of crude per month, had been facing the risk of partial
shutdown due to feedstock shortages.
The refinery produces petrol, octane, diesel,
furnace oil, and naphtha, meeting a significant portion of the country's fuel
demand.
"The arrival of one lakh tonnes of Arabian
light crude will keep Eastern Refinery functional and help stabilise the
supply-demand situation," said Monir Hossen Chowdhury.
Typically, each 1,00,000 tonnes of crude
processed at ERL yields 15-20% octane and petrol and around 30-35% diesel,
making such shipments vital for maintaining market stability.
Fiscal pressure to ease
The government had earlier earmarked an
additional Tk24,000 crore in subsidies to manage rising import costs of LNG and
petroleum products amid soaring global prices.
The recent drop in oil prices is expected to
provide some breathing space in managing this subsidy burden.
"The impact is substantial, but its
sustainability depends on how long the ceasefire holds and how the global
market responds," an Energy Division official said.
Due to force majeure by long-term LNG suppliers,
Petrobangla had to spend an additional Tk9,500 crore to import 22 cargoes for
April and May.
LNG market relief to lag behind
Despite the positive developments in oil
markets, Petrobangla does not expect immediate relief in LNG costs due to
structural pricing mechanisms and ongoing contractual constraints.
Chairman Md Arfanul Hoque said long-term LNG
suppliers have enforced force majeure until 18 May, meaning no cargoes will
arrive under these contracts until then.
"Even after supplies resume, we may incur
financial losses due to lagged pricing mechanisms embedded in both long- and
short-term contracts," he said.
"If we receive cargo for April, the price
would still reflect March, when the market was significantly higher," Arfanul
explained.
The situation is more complex for long-term LNG
contracts, which are indexed to the three-month average of Brent crude prices.
This means LNG imports scheduled for June and
July will be priced based on the average of March, April, and May – months
during which oil prices remained elevated.
"Even if spot LNG prices decline in the
coming weeks, the high Brent averages from March and April will continue to
influence long-term contract prices," he added.
This creates a potential mismatch where spot
market LNG could become cheaper than contracted supplies, limiting the
financial benefits of declining global prices in the short term.
Shipping and logistics pressures to ease
The ceasefire has also brought relief to the
shipping and logistics sector, which had been under severe strain due to the
conflict.
Khairul Alam Suzan, vice-president of the
Bangladesh Freight Forwarders Association, said the war had significantly
increased risks for vessels operating in the region, leading to higher
insurance premiums and freight charges.
"Due to the war, the logistics and shipping
sectors were facing severe risks. Insurance costs surged, and freight rates
increased sharply," he said.
Freight charges for covered vans on the
Dhaka-Chattogram route nearly doubled in recent weeks, rising from
Tk18,000-20,000 per trip to over Tk37,000.
The easing of tensions is expected to gradually
normalise these costs, although a full recovery may take time.
The business community has welcomed the
ceasefire as a positive development but remains cautious about its long-term
implications.
LPG Operators Association of Bangladesh
President Mohammad Amirul Haque said, "The war has created an LPG crisis
in the spot market. The price has already increased by more than 30% in the
world market. The 14-day ceasefire will ease this crisis to some extent."
Inamul Haque Khan Bablu, senior vice-president
of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said
it would take time for industries to recover from the recent disruptions.
"If stability continues, our export market
will also improve," he said.
Tipu Sultan, president of the Bangladesh
Finished Leather, Leather Goods and Footwear Manufacturers and Exporters
Association, said the decline in fuel prices is encouraging but uncertainty
persists.
"This is a good sign, as fuel prices have
already started to fall. But it is difficult to say how long this situation
will last," he said, noting the unpredictable nature of global
geopolitics.
MA Salam, managing director of Asian & Daf
Group and a former BGMEA leader, described the ceasefire as a transition from
uncertainty to cautious stability.
Md Arfan Ali, former managing director of Bank
Asia, said that the ceasefire has removed a major cloud of uncertainty and fear
from the Bangladesh economy.
"The cost of imports will be significantly
reduced as the price of petroleum in the international market falls. It will
reduce the negative pressure on our 'balance of payments' or balance of
transactions and the foreign exchange reserves," he said.
Shawkat Ali Khan, managing director and CEO of
Sonali Bank, said, "The major concerns about the balance of payments,
energy crisis and pressure on the dollar due to the war will be mitigated to a
large extent as a result of the ceasefire."
PRAN-RFL Group, which imports raw materials via
the Strait of Hormuz, said many of its cargo-loaded ships are floating at sea,
unable to unload their products.
Ahsan Khan, chairman of PRAN-RFL Group, said,
"We hope to be able to unload several Middle East-bound export ships,
which had remained stuck, during the 14-day ceasefire."
S Kaiser Kabir, CEO and managing director of
Renata PLC, said, "In the current situation, the ceasefire of about two
weeks is acting as a temporary relief for us. We have taken steps to quickly
send our export consignments and efforts are being made to quickly bring in the
raw materials."
Mohammad Zakir Hossain, secretary general of the
Bangladesh Association of Pharmaceutical Industries, said, "We are
optimistic about the ceasefire even in the current situation. Due to the upward
fuel prices, the prices of pharmaceutical raw materials have increased by
10-25% in the global market in the last few weeks."
















