The spike in global oil prices following Israel’s attack on Iran will cause significant economic pain for fuel-import-dependent countries like Bangladesh, said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD).
“As a fuel-import-dependent country, this oil price hike will cause pain to our country,” he told The Business Standard today (13 June).
“If the aftereffect is sustained, it will cause a bad impact on the trade balance and current account balance,” he added.
Mustafizur said that the situation remains volatile and depends heavily on the next steps from all involved parties.
“We have to see the nature of Iran’s retaliation and how much Israel goes further after the Iranian attack, and how the other Middle Eastern countries and the USA react. Combining all of those things, things can go either way – escalation or de-escalation,” he said.
He also noted that maritime shipping routes could be disrupted amid a tit-for-tat war, driving up import and export costs and undermining Bangladesh’s competitiveness.
“We have to wait to see whether this is a medium-term sustained trend or just a hiccup, but certainly it is a big warning for our trade and commerce,” Mustafizur cautioned.
Commenting on the US position, he added, “The US will pressurise Israel not to escalate further, which will be a relief for global businesses.”
“If the situation escalates further, it will not only impact the oil price but also the very commodity we consume every day, as the oil price is the barometer of commodity prices in the global market,” Mustafizur said.