Strait of Hormuz Crisis: Impact on Bangladesh and Global Economy

The Persian Gulf, particularly the Strait of Hormuz, is one of the most sensitive geopolitical flashpoints in the world. Any conflict in this region has global repercussions. The Strait of Hormuz is not merely a waterway; it is the lifeline of global energy security. Nearly one-fifth of the world’s oil passes through this route. Any disruption, whether through military blockades, attacks, or rising tension directly affects global oil prices, shipping costs, and supply chains. Even countries far removed from the conflict, such as Bangladesh, are not immune. Rising oil prices, inflation, and economic pressure directly impact the daily lives of ordinary people. The Strait of Hormuz is one of the most important maritime trade routes in the world and serves as the primary gateway for energy exports from the oil-rich countries of the Middle East. Approximately one-fifth of global oil supply passes through this narrow waterway each day. Therefore, it is not just a geographic location but a pulsating artery of the global economy. Historically, tensions have frequently surrounded this route, particularly during the Iran-Iraq War of the 1980s, when the “Tanker War” threatened regional security. This historical experience clearly demonstrates that instability in the Strait of Hormuz inevitably leads to instability in the global economy.

In the current context, rising military tensions centred on Iran and the partial or effective closure of the Strait have delivered a major shock to the global energy market. The reduction in oil supply has caused a rapid surge in international oil prices, sending shockwaves throughout the global economy. As energy prices rise, transportation costs increase, industrial production becomes more expensive, and agricultural sectors face higher costs for fuel and fertilisers. Consequently, the prices of food and almost all commodities have increased, intensifying global inflation. Many economists warn that if this situation persists, the world may face a complex stagflation condition where economic growth slows while inflation continues to rise. An important aspect of this crisis is that it is not limited to the oil market alone; it has multidimensional impacts on global supply chains, trade, and financial markets. Since most of the global trade is conducted via maritime routes, disruption in such a critical strategic chokepoint has worldwide consequences. Shipping delays, increased insurance costs, and uncertainty in international trade are already evident. As a result, both developed and developing countries are being affected in various ways.

For Iran, the conflict has a dual impact. On one hand, war and sanctions are harming its oil exports and economy. On the other hand, by exerting control over the Strait of Hormuz, Iran can create strategic pressure. In this sense, the Strait functions as a geopolitical weapon, enabling Iran to influence global powers. Looking back at history, energy crises have repeatedly shaken the global economy. The 1973 Arab oil embargo, the 1979 Iranian Revolution, and the 1990 Gulf War all led to sharp increases in oil prices and global economic downturns. The current situation represents a new chapter in that historical continuum, but it is even more complex due to the highly interconnected nature of today’s global economy.

When powerful states threaten to destroy “utility installations” or attack “military bases", these are not mere political statements, they signal the potential for devastating warfare. Iran’s warning that it may target US regional bases in response to US threats is particularly significant, given the extensive American military presence across Qatar, Bahrain, the UAE, Kuwait, and Saudi Arabia. Any attack on these bases could draw the entire region into war. The most alarming aspect is the nature of modern warfare. War is no longer confined to military installations; utility infrastructure includes power plants, water facilities, oil refineries, ports, and communication systems, all directly tied to civilian life. Attacks on such targets would result in humanitarian disasters, widespread destruction, and long-term economic damage. Cycles of retaliatory strikes could quickly spiral out of control. 

From a geopolitical perspective, this conflict will not remain confined to the United States and Iran. China, Russia, and European powers all have significant interests in the region. China is heavily dependent on Middle Eastern energy, while Russia may seek to reshape global power balances. Europe, already facing energy challenges, would suffer further from any escalation. Thus, this crisis has the potential to evolve into a multi-layered global instability. Ultimately, the primary victims of such conflicts are ordinary people. Therefore, peaceful resolution is not only a strategic imperative but also a humanitarian necessity. Continued diplomatic engagement, the role of mediating states, and proactive initiatives by international organisations are essential to de-escalating tensions. Otherwise, military confrontation could reach a point where no nation remains unaffected.

This is fundamentally a test of leadership, whether global actors will prioritise displays of power or choose long-term peace and stability. History seldom remembers harsh rhetoric; but it surely celebrates the wisdom that prevented destruction. The future now depends on prudence, patience, and restraint. Without this, the world may drift towards a level of instability whose cost will be borne by all humanity. 

For an import-dependent economy like Bangladesh, this crisis is particularly alarming. Since a large portion of its energy demand is met through imports, any increase in global oil prices directly impacts the domestic economy. Fuel prices in Bangladesh have already risen, increasing transportation costs, electricity generation expenses, and industrial production costs. As a result, the cost of living has surged, placing significant pressure on ordinary citizens. This situation serves as a critical warning for Bangladesh. Reducing dependence on a single energy source, diversifying energy supply, investing in renewable energy, and improving energy efficiency are now essential. Building strategic oil reserves and adopting long-term energy planning are equally necessary. Otherwise, similar global crises will continue to destabilise the economy. 

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The writer is a retired Major General, geopolitical and security analyst. He can be reached at [email protected]