Md Tarek Hossain: A paradox is shaping the global energy market in 2026. There is more oil in the world than is needed, yet prices remain under pressure and countries like Bangladesh are feeling the strain as the ongoing Middle East conflict unsettles supply lines.

A recent international energy outlook shows that global oil production is set to reach about 107.5 million barrels per day this year, while demand is projected at around 105.5 million barrels per day. The surplus, a continuation from 2025 when supply exceeded demand by 2.2 million barrels per day, would normally ease prices. 

But the market is not behaving in the usual way. Instead, geopolitical tensions are keeping prices elevated, as traders factor in the risk of disruption, particularly in the Middle East.

At the centre of concern is the Strait of Hormuz, a narrow but critical route through which roughly 20 per cent of global crude oil and 30 per cent of liquefied natural gas pass. Any disturbance there—whether from direct conflict, shipping threats or political escalation—can quickly ripple through global markets.

The report notes that tensions involving Iran, along with the continuing Russia-Ukraine war, have added a persistent “risk premium” to oil prices. Even limited disruptions, such as attacks on tankers or export restrictions, could trigger sudden spikes.

At the same time, supply continues to grow. New offshore projects in Brazil and Guyana, alongside rising production from Canada and Argentina, are adding significant volumes to the market.

Demand, meanwhile, is increasing more slowly. Global consumption is expected to rise by about one million barrels per day in 2026, driven largely by emerging economies and continued stockpiling by China, which is building up its strategic reserves.

Yet these fundamentals are being overshadowed by uncertainty.

The natural gas market tells a similar story. While long-term demand remains strong—particularly due to rising electricity needs and expanding LNG trade—the short-term outlook is volatile. The market is shifting from a surplus to a tighter balance, with weather and export growth adding to fluctuations. 

For Bangladesh, these global dynamics are not abstract. They are already translating into economic pressure.

The country depends heavily on imported fuel, sourcing most of its oil and a large share of its liquefied natural gas from abroad, much of it linked to Middle Eastern supply chains. As a result, any disruption in that region directly affects domestic energy security.

Recent weeks have seen a sharp rise in import costs, forcing the government to absorb higher expenses to keep domestic prices stable. This has placed additional strain on public finances and foreign exchange reserves, at a time when the economy is already navigating broader external pressures.

There are also concerns about supply continuity. Delays in shipments and tighter global availability have raised fears of shortages, prompting authorities to adopt conservation measures and closer monitoring of fuel distribution.

Industry insiders say the impact could extend beyond the energy sector. Higher fuel costs tend to feed into transport, electricity generation and manufacturing, increasing overall production costs and adding to inflationary pressure.

The global outlook suggests that oil prices may remain within a moderate range if supply continues to outpace demand. However, the report cautions that geopolitical risks could quickly override these fundamentals, keeping markets volatile.

For Bangladesh, the situation underscores a familiar vulnerability. Even in a world of abundant energy supply, distant conflicts can tighten access, raise costs and disrupt planning.

As the Middle East conflict continues with no clear resolution, the country finds itself balancing between global surplus and local uncertainty—watching events far away shape realities at home.