Sheikh Selim
Oniket Research Group
The International Energy Agency in a recent announcement said that global oil supply should exceed demand in the fourth quarter. Gulf exports recovered enough to create an October surplus, the first since the Iran war began. Gulf shipments reached 18.4 million barrels per day, still 26 percent below levels before the war, and attacks on tankers near Hormuz continue.
The agency expects demand to fall by 2.7 million barrels per day this year, as high prices accelerate electrification and fuel efficiency. Diesel, however, stood near $180 a barrel in October, about 77 percent above its prewar level. The agency itself calls diesel tightness the overriding concern. In this article, we initiate the discussion on what it means for Bangladesh.
A critical view
The headline is more comforting than the substance. Much of the projected surplus reflects demand destruction rather than genuine abundance: global demand is forecast to fall by 2.7 million barrels per day this year because consumers are being priced out, so balance is being restored through hardship rather than through plentiful supply. The recovery in supply is also fragile in its origins, because it depends on Tehran authorizing vessels one by one to cross the Strait of Hormuz. That is a political permission, not a market fact, and it can be withdrawn as quickly as it was granted, particularly while attacks on tankers continue.
The aggregate crude balance also conceals what matters most to an importer like Bangladesh. The country buys refined products, above all diesel, and these remain tight because Gulf refineries have been damaged and Ukrainian strikes continue to disrupt Russian ones, which is why diesel still trades far above its prewar level even as the wider market eases. The agency itself describes the signs of rebalancing as tentative, and a forecast covering a single quarter is a thin basis for national planning. Falling prices are welcome, but they are not the same as secure supply.
Implications for Bangladesh’s oil trade
Bangladesh imports most of its fuel, so it is a price taker with little buffer. Softer crude prices may ease the import bill, dollar reserves and subsidy burden, and greater competition among sellers could improve its bargaining position. The relief will be smaller than the headline suggests, however, because diesel premiums, freight and insurance costs remain elevated. The real danger is complacency.
The crisis record is mixed. In March, diesel stocks fell below ten days of cover and panic buying doubled sales. The government introduced rationing, deployed border guards at depots, ordered energy saving measures and hybrid schooling, and searched worldwide for cargoes, including from India and Kazakhstan, while seeking a US waiver for Russian diesel. Prices rose in April and again in September, by up to 17.4 percent.
The response showed energy and useful diversification, but also weaknesses. Rationing was lifted within days, which signaled plenty and encouraged hoarding, and dry stations persisted around Eid. Supply stayed unreliable for weeks, and power and gas shortages continued. Conservation measures were largely administrative and did little to reduce structural fuel demand, and there is no clear sign of lasting reserve expansion. Credit is due to avoid collapse and moving prices toward cost recovery, but the approach was firefighting rather than a sustainable strategy for conservation and uninterrupted supply.
Should the strategy be revised?
Yes, but the revision should not be a relaxation. The IEA’s forecast offers a window, not a guarantee. The way to judge the government’s strategy is to ask whether it would have prevented the March disruption, and on that test it falls short, so the window should be used to close specific gaps.
The most visible gap is physical cover. In March, diesel stocks fell below ten days, and a stock of roughly 137,000 tones later described as sufficient equated to only about eleven days of consumption. IEA members are expected to hold ninety days of net imports, and although Bangladesh is not bound by that standard, the comparison shows how exposed a buffer measured in days leaves a country. Storage carries capital and price risks, but these are small besides the losses from weeks of disrupted transport, power and fisheries. A realistic path would raise cover in stages toward a legislated reserve, funded transparently rather than through ad hoc purchases.
How fuel is bought matters as much as how much is held. March’s scramble for cargoes, including a request for a waiver on Russian diesel, showed resourcefulness but also improvised procurement at peak prices and with sanctions exposure. A portfolio of term contracts with several suppliers would reduce this dependence, though take or pay clauses and benchmark-linked pricing carry risks. A sensible design mixes term and spot volumes, uses transparent tenders, and publishes its pricing formula, which would also strengthen the credibility of this year’s two price rises.
Conservation is the weakest part of the record. While the IEA notes other economies shifting toward electrification and efficiency, Bangladesh’s measures, such as switching off office equipment, hybrid schooling and temporary rationing, fade once pressure eases. Durable reductions require changing consumption itself: solar irrigation to displace diesel pumps, rooftop solar to cut grid and generator demand, efficiency upgrades in power generation, and better public transport. These investments are costly and slow, but the crisis has shown the price of waiting, and falling oil prices are precisely when political will tends to fade.
The energy mix needs the same attention. Subsidized LNG strains public finances and leaves gas supply exposed to the same disrupted shipping routes as oil. Expanding the India pipeline offers a nearer route for diesel, though it cannot meet national demand and creates dependence on one neighbor. Domestic gas exploration is a better long run hedge, but it is a decade long commitment, not a crisis response. Finally, March showed that perception matters as much as supply: lifting rationing abruptly undermined confidence, so rules, stock levels and expected arrivals should be communicated consistently, with restrictions that are targeted and predictable.
The IEA’s forecast is welcome news, but it describes a fragile and uneven recovery that rests on political permissions in the Strait of Hormuz and leaves diesel tight. Bangladesh should treat it as breathing space to build reserves, diversify procurement and cut structural demand, not as a signal that the crisis is over.
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