Middle East crisis set to affect global economy

War, bloodshed, conflict and violence can never be a path to a solution. Instead, war brings instability, unrest, countless deaths, massive destruction of resources and leaves behind piles of devastation. No nation or people ultimately benefit from war. Yet throughout history, individuals, states and governments have repeatedly become involved in conflicts. The visible reasons are often territorial expansion, control over resources, dominance and the assertion of sovereignty.

The reasons behind the recent attacks involving Iran, the United States and Israel are different. Expanding American influence, controlling energy resources and establishing military bases are often cited as the primary objectives behind such attacks. Iran, on the other hand, has responded using advanced ballistic missiles. These missiles reportedly have the capability to strike targets up to 12,000 to 12,500 kilometers away. With such range, Iran could theoretically target locations in the United States or Europe.

Iran claims that no other country possesses ballistic missiles of similar power and sophistication. According to this claim, Iran's adversaries lack the capability to effectively intercept such attacks. In such a complex and multi-sided conflict, there is growing concern that Bangladesh and many other countries around the world may face serious crises due to shortages of fuel oil, LPG and LNG.

Initially, the United States and Israel launched attacks on Iran. Iran later responded with aerial counter-attacks targeting U.S. and Israeli interests. At the same time, Iran has reportedly targeted American military bases across oil-rich Middle Eastern countries such as Qatar, Dubai, Abu Dhabi, the United Arab Emirates, Sharjah, Bahrain and Oman. Attacks have also been reported on U.S. embassies and oil facilities in the region.

Iran has also announced the closure of the Strait of Hormuz, one of the most important maritime trade routes in the world. As a result, global supplies of fuel oil, LPG and LNG are at risk of disruption. The suspension of cargo ship movements through the Strait of Hormuz has already created instability in global commodity markets. If alternative shipping routes are used, transportation time and costs could increase several times over. If the situation continues, the global energy crisis may intensify further. Already, fuel, LPG and LNG supplies have declined in several countries, including Bangladesh.

So far, the conflict has largely consisted of aerial attacks and counter-attacks. However, the Iran-Israel-U.S. confrontation is affecting several countries across the Persian Gulf and the Mediterranean region. Hundreds, even thousands of casualties have been reported in the ongoing exchanges. The Strait of Hormuz, one of the world's most crucial maritime trade corridors, has been closed. Both sides have signaled that the conflict may escalate further.

Experts say the Middle East has entered a highly unstable phase in global politics. The conflict there could significantly alter the trajectory of the global economy. The dark clouds over the Middle East have again created concern across the world. If the Iran-Israel conflict continues for a prolonged period, its impacts will reach far-away regions such as South Asia. Bangladesh is not directly involved in the conflict, yet it faces several potential economic risks.

If the war becomes prolonged, the indirect impacts may be even greater than the direct ones. It could destabilize Bangladesh's macroeconomic stability.

Amid this fragile economic environment, the new government now faces another global crisis due to the Middle East conflict. The longer the war continues, the greater its impact will be-particularly on import-export trade, energy supply, remittance inflows, aviation, and the stock market. If the conflict drives up the value of the U.S. dollar, Bangladesh's trade balance could face further disruption.

On March 2, Prime Minister Tarique Rahman held discussions with senior government officials regarding the safety and overall situation of Bangladeshi expatriates. Foreign Minister Dr. Khalilur Rahman and the Prime Minister's Foreign Affairs Adviser Humayun Kabir met with him at the Secretariat. The Minister of Power, Energy and Mineral Resources also held discussions with the Prime Minister.

Following the meeting, Foreign Affairs Adviser Humayun Kabir stated that Bangladesh currently has sufficient energy reserves and there is no immediate cause for concern. However, he acknowledged that temporary fluctuations in energy supply could occur during global crises.

Capital market experts say that after the attack on Iran, the biggest concern in international markets centers on oil prices. If supply disruptions occur or if the Strait of Hormuz remains under threat, global oil prices could rise sharply. Since Bangladesh is heavily dependent on imported fuel, any increase in global prices will directly affect the country's production and transportation sectors.

Higher oil prices generally lead to higher prices for all goods and services. This would make the cost of living even more difficult for ordinary people and could intensify inflationary pressures. The balance of payments could face significant strain. Rising oil prices would increase the demand for dollars, putting additional pressure on the Bangladeshi currency and making imports and debt repayments more expensive.

The Centre for Policy Dialogue (CPD) has warned that for developing countries like Bangladesh, the impacts of such a war could be direct and multifaceted. The depth of the crisis will largely depend on the duration and expansion of the conflict. If the war ends quickly, the impacts may remain limited. But if it continues for a long time, Bangladesh could face serious challenges.Ensuring national energy security will therefore be crucial.

If the Strait of Hormuz remains closed, shipping costs will rise significantly. Cargo vessels from Chattogram port that normally travel through the Strait may have to use longer routes through the Indian Ocean and the Atlantic, increasing both time and costs.

Airspace closures in parts of the Middle East have already disrupted cargo flights from Bangladesh, affecting urgent exports. Oil and LNG imports from the region may also face obstacles.

If the conflict continues, consumer purchasing power in Western markets could decline, reducing demand for products such as garments. Higher energy prices would increase domestic production costs. If exporters are forced to use alternative shipping routes to Europe and the United States, Bangladesh's trade competitiveness could be severely affected.

A prolonged U.S.-Iran war could also affect labor markets across Middle Eastern countries such as Kuwait, Iraq, Iran, Bahrain and Saudi Arabia. This could reduce employment opportunities for migrant workers and lead to a decline in remittance inflows. Nearly 60 percent of Bangladeshi migrant workers are employed in Middle Eastern countries, and they contribute around 49 percent of the country's total remittances.

Bangladesh currently imports around 7 million tons of fuel annually, most of it from Middle Eastern and Asian countries. If oil supplies are disrupted due to the conflict-especially if the Strait of Hormuz remains closed-the country's energy sector could face severe difficulties.

If major powers such as Russia and China become involved in the conflict, global trade and shipping routes could face even greater disruptions.

Therefore, the international community-including the United Nations, the United States, Israel, China and Russia-must take sincere initiatives to stop the war. War never brings peace. The greatest hope of people around the world is not war, but peace.