Farhad Hossain1,* and Rabiul Karim2
1Lecturer, Department of Economics, Asian University of Bangladesh, Dhaka, Bangladesh and 2Assistant Professor, Department of Economics, Asian University of Bangladesh, Dhaka, Bangladesh
Email of corresponding author: farhadru2187@aub.ac.bd
Abstract: Bangladesh imports over 90% of its primary energy, with the majority passing through the Strait of Hormuz (U.S. Energy Information Administration, 2025). The 2026 Iran-Israel war represents the most severe geopolitical energy shock in Bangladesh’s history, exceeding the 2022 Russia-Ukraine crisis in both intensity and direct transmission speed (Inquirer Plus, 2026; The Business Standard, 2026). This paper tests the hypothesis that geopolitical tensions involving Iran, Israel, and the United States transmit into Bangladesh’s domestic energy crisis through three channels: LNG spot price spikes, long-term supply contract cancellations via force majeure, and foreign exchange reserve draw downs. Using an event study methodology covering six conflict episodes between 2019 and 2026, combined with monthly time-series data (January 2020–May 2026), we find that Hormuz-related tensions explain 67.31% of the variance in Bangladesh’s quarterly LNG import bill (R² = 0.67). The 2026 war triggered a 125% spike in spot LNG prices $20.41-$22.51 per MMBtu within four weeks, while long term suppliers from Qatar and Oman declared force majeure, forcing emergency spot purchases at double pre war prices (The Financial Express, 2026; The Business Standard, 2026). Total additional import costs reached–830 million monthly, with projected reserve depletion of $6 billion by end-2026 (New Age BD, 2026). The paper develops a three-tier pathway to resilience: strategic reserves (short-term), domestic gas governance reform (medium-term), and accelerated renewable transition (long-term) (Lion City Advisory Research, 2026). We conclude that for import-dependent developing economies, renewable transition is not an environmental co-benefit but a geopolitical necessity—and the 2026 war has made this imperative undeniable.
Keywords: Energy Security; Geopolitical Risk; Strait of Hormuz; LNG; Renewable Transition; Bangladesh; Iran-Israel War 2026.