Dhaka:Letters of credit (LCs) for importing petroleum and petroleum products in Bangladesh surged by approximately 63 percent year-on-year, reaching US$3.7 billion in the first quarter of the current fiscal year (FY27). This increase has been attributed to the rising global oil and gas prices, exacerbated by the ongoing Middle East conflict.
According to Bangladesh Sangbad Sangstha, the data from Bangladesh Bank revealed that LCs for petroleum and petroleum product imports amounted to $2.28 billion during the same period of the previous fiscal year. Specifically, LCs for crude oil imports tripled to approximately $630 million in the first quarter of FY27, compared to just over $200 million a year earlier.
Furthermore, the value of LCs opened for other petroleum products, including gas, increased significantly to $2.4 billion from $1.12 billion in the same timeframe. LC settlements for petroleum and petroleum product imports also saw a rise of 26 percent year-on-year, amounting to $2.93 billion between July and September.
The global average Brent crude prices escalated by more than 40 percent year-on-year, reaching $97 a barrel in July-September, up from $69 a barrel the previous year, as per the World Bank's commodity price data. Additionally, the average price of liquefied natural gas (LNG) in Japan increased to $14.45 per million British thermal units (MMBtu) during the quarter, compared to $11.73 the previous year.
Bangladesh, which fulfills over one-third of its natural gas demand through imports, has been increasingly reliant on the spot market for LNG supplies following QatarEnergy's declaration of force majeure. The spot-market price of LNG has soared to around $30 per MMBtu, nearly tripling the typical pre-conflict levels, thereby adding further strain to the country's energy budget. Bangladesh's annual petroleum requirement exceeds 6.8 million tonnes, with diesel constituting more than two-thirds of the total demand.