Energy Crisis Hits Bangladesh and Pakistan Amid Gulf Conflict

A global energy crunch triggered by conflict in the Gulf has caused severe fuel and power shortages across Bangladesh and Pakistan. The crisis follows U.S. and Israeli attacks on Iran and ongoing fighting between Saudi Arabia and Iran-backed Houthis in the Red Sea, which disrupted shipments through the Strait of Hormuz. Shell plc estimates the world lost approximately 36 million tonnes of LNG from the Middle East in 2026, pushing Asian spot prices from $10 to nearly $30 per million British thermal units.

In Bangladesh, Iqbal Hassan Mahmud, the Power Minister, reported that the shortage is slowing industrial growth and production. The garment sector has been hit hardest, with 78% of factories partially halting production and 55% of knitwear factories reporting canceled or reduced orders. The national crisis is further exacerbated by a July 21 fire at an Excelerate Energy Bangladesh Limited floating LNG terminal in Moheshkhali. In Dhaka, residents in areas like Dhanmondi and Lalbagh have faced months of shortages while still paying full bills to the state distributor Titas Gas.

Pakistan has responded to rising fuel costs and public anger by launching the Prime Minister's Fuel Relief Scheme on September 16, providing a 100-rupee per litre subsidy for small vehicle owners. In Islamabad, the government imposed early closing hours for markets and restaurants and banned the purchase of new government vehicles and official dinners to curb spending.