Beyond the panic at the petrol pump

Over the past two weeks, there have been more questions about Bangladesh’s energy situation than about any other topic in recent memory. In very plain terms, people want to know whether they should be afraid. Anxiety without information is dangerous, and right now, fear is outrunning the facts. The picture that emerges from the data is more nuanced than what most people think.

The petrol sold in Bangladesh is 100 percent produced domestically, from local refineries processing condensate from domestic gas fields and crude, according to BPC officials. About half of octane is also produced locally, with a small share of imported components sourced from outside the Middle East. Even the supplemental petrol that is imported comes primarily from Singapore, not the Gulf. The fuel that most people are queuing for is not at risk.

Yet demand for it has nearly doubled. In the first days of March, daily petrol demand surged from a normal 1,300 tonnes to over 2,300 tonnes. Octane went from 1,100 to over 2,000. Diesel, which actually faces import risk, jumped from 12,000 to 25,000 tonnes a day. None of this was real consumption but people are pulling forward future purchases. Multiply that across thousands of vehicle owners and the system buckles under demand that does not exist. The government’s rationing measures are not a signal that fuel is running out. They are designed to break the hoarding cycle before it creates the very shortage people fear.

There is no question that Bangladesh remains vulnerable where it matters most. The country imports 95 percent of its oil demand and 30 percent of its gas demand. LNG, which feeds the power grid and fertiliser plants, has no meaningful storage and operates on a tight delivery cycle. The core exposures in crude and LNG remain concentrated and Hormuz-dependent.

The questions then turn to diesel and furnace oil, which is critical for our agricultural and industrial sectors. The answer requires looking at the actual import data rather than the headlines. Diesel, which accounts for 65 percent of total fuel use, comes primarily from Singapore and Malaysia. That said, refineries in Singapore and Malaysia are also curbing production, as crude feedstock from the Middle East start to drop.

The bigger concern is what happens if this war drags on. Gulf producers who have already curtailed output will eventually run out of storage and be forced to shut in production entirely. A prolonged conflict means that even if safe passage is restored, there may be little left to ship.

There are also risks building quietly that most people are not yet tracking. Bangladesh’s long-term LNG deals are indexed to oil prices on a three-month lag, similar to other South Asian countries. The full cost of $90-plus Brent will not hit the LNG import bill until June, 2026. The fiscal arithmetic gets significantly worse from the second quarter onward, regardless of whether the strait reopens this month.

Bangladesh Bank faces a balancing act between defending the taka and supporting growth. Remittances have been a genuine bright spot, with $3.17 billion in January 2026 alone, up 45 percent year-on-year. That is a buffer most import-dependent economies do not have. But a sustained oil price shock will erode it. The central bank should resist the temptation to cut rates prematurely. Defending the currency and preserving reserves matters more right now than stimulating credit.

The Energy Minister met the Iranian Ambassador on March 10, and reportedly secured a safe-passage arrangement for Bangladeshi-flagged vessels through the Strait of Hormuz. The deal does not eliminate operational risk, but it opens a channel that did not exist a week ago.

The United States has now granted a temporary waiver of sanctions on Russian crude oil.  However, Bangladesh’s only refinery, built in 1968, cannot process heavier Russian crude, so the country would need refined products. Transit from Russia’s western ports takes 30 to 40 days, longer with Houthi disruptions in the Red Sea. As a medium-term diversification option, it is worth pursuing. An immediate solution does not exist. Saudi Arabia’s Yanbu port on the Red Sea is a faster alternative, with tankers that could reach Chittagong in 10 to 14 days.

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For anyone tracking where this goes, there are a handful of indicators that matter more than the rest. The most important is the Hormuz reopening timeline. Until there is clarity on that, nothing else stabilises. A short closure is a shock the region absorbs. A prolonged one rewrites the cost structure of everything Bangladesh imports.

We need to watch Brent crude and Asian LNG spot prices more closely. These determine the real cost of every replacement cargo Bangladesh is sourcing right now. If both stay elevated through the second quarter, the import bill grows in ways that pressure reserves and the exchange rate simultaneously.

The US dollar rate and Bangladesh Bank’s weekly reserve data are the clearest early warning signals for external stress. Remittances are strong, but a sustained oil price shock is a large force working in the opposite direction. If reserves start sliding and the taka weakens faster than the central bank can manage, that is when the energy crisis becomes a broader economic one.

For the private sector specifically, freight rates and shipping availability deserve attention. Vessels are rerouting. That adds time and cost to supply chains that were already under pressure, and it hits import-dependent manufacturers before the fuel price does.

There is reason for cautious confidence. The government has moved quickly and built a stockpile of 4-6 weeks across various energy categories. Alternative supply routes are active, and diplomatic channels have kept Bangladeshi vessels moving. What keeps this situation under control is what ordinary people do next.

Ayesha Tariq, CFA is CEO and Co-Founder of MacroVisor, a Dubai-based independent macro research firm.