Israel-Iran Conflict Shakes Global Markets Oil, Gold Prices Spike; Bangladesh Trade Routes Under Threat

Israel-Iran Conflict Raises Alarms Over Trade, Inflation Risks for Bangladesh

The escalating conflict between Israel and Iran is already pushing global oil and gold prices higher, fueling concerns over disruptions to global trade, production, and business stability.

Bangladeshi business leaders and economists warn that a prolonged war could disrupt exports, drive up shipping costs, and reduce demand for Bangladeshi labour in the Middle East.

“Any war or conflict impacts the global economy. Oil and transport costs rise, hurting business. Export-import lead times increase, inflating operational expenses. In such times, businesses adopt a wait-and-see approach,” said Mahmud Hasan Khan Babu, newly elected president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and managing director of Rising Group.

Babu cautioned that heightened tensions could negatively affect the readymade garment (RMG) sector and the broader economy, particularly if conflict disrupts key maritime trade routes—raising costs and delaying shipments.

Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh, echoed similar concerns: “This war could disrupt the global supply chain and drive up oil prices, ultimately fueling inflation.”

Dr Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, highlighted risks to strategic chokepoints like the Strait of Hormuz—a narrow passage near Iran that handles roughly a quarter of global oil trade.

“If the conflict escalates and affects the Strait of Hormuz, global oil supply could be severely disrupted, pushing prices even higher,” he warned. He also cited risks to the Suez Canal, noting that Iran-aligned groups, such as the Houthis in Yemen, have previously disrupted Red Sea traffic.

“If such disruptions return, shipping costs and lead times will surge,” he added, noting that labour demand for Bangladeshi workers in the Gulf could also decline.

Mohiuddin Rubel, managing director of Bangladesh Apparel Exchange and additional managing director of Denim Expert Ltd, said the geopolitical turmoil is undermining global business confidence.

“With oil prices climbing and logistics strained, production and transportation are already facing setbacks,” Rubel said. “The Middle East supplies nearly a third of global crude. Any closure of the Strait of Hormuz could push Brent crude to $120–130 per barrel.”

He warned that if the Suez Canal is affected, vessels may need to reroute via the Cape of Good Hope, extending shipping times by up to 15 days and sharply increasing costs.

“Container shipping expenses could jump 30–40%, putting pressure on exporters,” Rubel said. He also cautioned that inflation may weaken global demand, prompting order cancellations and revenue losses.

“We urge global leaders to act swiftly to de-escalate tensions,” he added. “But it’s also important not to draw premature conclusions. The situation is fluid and must be closely monitored.”