The Hormuz Bill

Executive Summary: Iran closed the Strait of Hormuz on 4 March 2026, and as of the date of this analysis, commercial tanker traffic through the strait remains near zero. Bangladesh's policy conversation has framed this as an oil-price problem. It is not. The country's $22 to $26 billion annual exposure to Hormuz-routed trade flows through seven channels, of which the largest is GCC remittances ($15 to $18 billion per year) and the most time-critical is urea for Boro paddy, with the next critical window opening in February 2027. BCIC has already cancelled urea tenders and is racing to secure alternative supplies from Egypt, Indonesia, and Russia. The preparation package proposed here costs $437 to $447 million in one-time outlay and has a benefit-cost ratio of 15 to 25 against the moderate scenario alone.

The governing thought of this analysis is falsifiable: a 30-day partial Hormuz closure that lands inside the February-March Boro urea window costs Bangladesh on the order of Tk 80,000 to 130,000 crore, while the package that blunts it costs Tk 5,330 to 5,450 crore in one-time outlay. If that loss can be shown to be materially smaller, or the package materially more expensive, the case for acting now collapses. The numbers below are the test.

When the Strait of Hormuz comes up in Bangladeshi policy conversations, it comes up as an oil story. The headline framing is the petrol pump: a closure scenario, the line goes, would mean diesel queues, generator shortages, transport prices. That framing is not wrong. It is just the smallest column on a much wider invoice. Bangladesh's full Hormuz bill runs through at least seven channels: the wages of four to five million Bangladeshis working in the Gulf, the urea bag in a Boro field, the LNG cargo at Moheshkhali, the diesel at the BPC depot, the bunker fuel under a container ship leaving Chittagong, the palm oil drum at the Karwan Bazar wholesale, and the jet fuel under the wing of a Biman flight to Jeddah. Each of these prices the strait differently. Together they place Hormuz exposure several multiples above what the oil-only conversation suggests.

This piece is dated 4 May 2026 deliberately. The Boro paddy crop now being harvested in the haors and the northwest paddy belts received its second urea topdressing in the February-March window that has just closed, so this year's calendar lock has already passed. The risk being priced here is the next Boro cycle, with its critical fertilizer window in February-March 2027, and the package proposed at the end is sized to that twelve-month preparation horizon. The price of being wrong is paid in Boro 2027, not Boro 2026.

The structure is a single chain of evidence. It maps what flows through Hormuz that Bangladesh actually needs, and the seven channels through which a disruption arrives. It runs three scenarios, ranging from a one-week mining-and-clearance event to a 90-day full closure, and prices each in the currencies that matter to a Bangladeshi household: dollars at the import quay, taka at the BCIC tender and the bazar, rice and edible oil per kilogram, remittance taka per receiving family, and load-shed hours per day. It then asks what the country has actually done about the risk, and what a credible six-month emergency package would cost against doing nothing.

What flows through Hormuz that Bangladesh needs

The Strait of Hormuz is the maritime corridor between Iran and Oman through which roughly 17 to 21 million barrels per day of crude oil and condensates transit, plus about 20 percent of the world's seaborne LNG, almost all of it Qatari (with a smaller UAE share from Das Island). The strait's narrowest navigable section is approximately 21 nautical miles wide, with two-mile-wide shipping lanes in each direction. There is no maritime alternative for a vessel that loaded inside the Persian Gulf. There are two pipeline alternatives that bypass the strait: the Saudi East-West (Petroline) pipeline, with effective crude-equivalent capacity in the 5 to 7 million barrels per day range after recent expansions to handle additional NGLs, and the UAE Habshan-Fujairah pipeline at 1.5 million barrels per day. Combined nameplate bypass capacity is roughly one-third of normal Hormuz throughput, and only Saudi and UAE crude can use it. There is no pipeline or rail bypass for LNG.

Bangladesh draws on Hormuz across six commodity lines and one labour line. The commodity lines are crude and refined products, LNG, urea, DAP and other phosphates, edible oil (indirectly, through global price formation rather than direct shipping route), and aviation fuel. The labour line is the roughly 4.0 to 5.0 million Bangladeshis working in the six GCC states, whose wages are paid out of oil revenues that depend on Hormuz exports.

• Crude and refined products. Bangladesh's total petroleum import volume runs at roughly 6.5 to 7.5 million tonnes per year, of which only about 1.4 to 1.5 million tonnes is crude (the throughput limit of Eastern Refinery, ERL Chittagong). The remaining 5 to 6 million tonnes are refined products: high-speed diesel, jet fuel, furnace oil, and lighter fractions. Crude is sourced predominantly from Saudi Aramco and ADNOC, both of which load inside Hormuz. Refined-product imports come from Gulf refiners, Singapore, India and increasingly Russia. Diesel specifically, which carries the irrigation-pump load during Boro, runs at roughly 4.5 to 5 million tonnes per year.
• LNG. Petrobangla now holds approximately 4.3 million tonnes per year of contracted LNG from Qatar across two sale-and-purchase agreements (the original 2017 QatarGas SPA at up to 2.5 mtpa, plus a supplementary 2026 contract for an additional 1.5 to 1.8 mtpa, both loading at Ras Laffan inside Hormuz), and a 1.0 million tonne per year contract with Oman, loading at Qalhat which is east of the strait and unaffected by a closure. Spot LNG, when bought, has come from a mix of US Gulf, Equatorial Guinea, Trinidad, and Australia origins; none of these load through Hormuz, but spot prices are set by global supply and rise together when the Qatari volume is at risk.
• Urea. Bangladesh's annual urea requirement is approximately 2.6 million tonnes. Domestic production from BCIC's natural-gas-based plants (Jamuna, Shahjalal, KAFCO with a Japanese counterparty, and the new Ghorasal-Polash plant inaugurated in September 2023) supplies about 1.3 to 1.5 million tonnes when gas allocation is steady; imports cover the remaining 1.1 to 1.3 million tonnes, of which Saudi Arabia (Sabic), Qatar (Qafco) and the UAE (Fertiglobe) collectively supply more than half in most years. Russia, Indonesia and Iran (cross-border informal trade) supply the remainder.
• DAP and other phosphates. Bangladesh imports nearly all its DAP (diammonium phosphate), TSP (triple superphosphate) and MOP (muriate of potash) demand, totalling approximately 1.5 to 1.8 million tonnes per year combined. Saudi Arabia (Ma'aden) and Morocco (OCP) are the two dominant DAP suppliers; the Ma'aden flows transit Hormuz, OCP does not. MOP is largely Belarussian and Canadian and does not transit Hormuz, but its price moves with global fertilizer contagion.
• Edible oil and food basket. Bangladesh imports roughly 85 to 90 percent of its edible oil consumption, totalling approximately $2.5 to 3.0 billion per year. Crude palm oil from Indonesia and Malaysia and soybean oil from Argentina and Brazil are the two largest categories. None routes through Hormuz. Both are price-coupled to global oil markets through input cost (energy) and shipping (bunker fuel) channels.
• Jet fuel and aviation. Bangladesh's annual jet fuel demand runs at approximately 600,000 to 800,000 tonnes, sourced from a mix of ERL output and Gulf and Singapore refiners. Biman's fuel bill alone is in the $300 to $400 million per year range and accounts for roughly a quarter of operating cost.
• GCC remittances. Bangladesh received approximately $26 to $30 billion in inward remittances in FY 2024-25, a record year. Roughly 60 to 65 percent of that flow originated in the six GCC states (Saudi Arabia, UAE, Qatar, Oman, Kuwait, Bahrain), giving a GCC remittance flow of approximately $15 to $18 billion per year. Saudi Arabia alone is consistently the largest single source, at $5 to $6 billion. The labour stock in the GCC is approximately 4.0 to 5.0 million Bangladeshi workers, with Saudi Arabia the dominant host (approximately 2.5 million per the 2023 Saudi census) and the UAE the second-largest.

Aggregating across the commodity and labour lines, Bangladesh's annual exposure to Hormuz-routed dollar value is approximately $22 to $26 billion per year in normal conditions. This is roughly 4 to 5 percent of GDP. The fertilizer-and-energy component, which the original framing treated as the entire bill, is the smaller half. Remittances are the larger half.

The seven channels

Each channel responds to a Hormuz disruption with its own price ladder, its own delivery lag, and its own substitutability. They do not arrive on the household budget at the same time. They do not accumulate with the same persistence. The package proposed in the final section is sized to the channels with the highest combined damage and the lowest substitutability inside the relevant calendar window.

1. Remittances

The remittance channel is the largest in dollar terms and the slowest in policy reaction time. A Hormuz disruption hits the GCC economies first. Saudi Arabia, the UAE, Qatar, Oman, Kuwait and Bahrain finance the wages of roughly 4.0 to 5.0 million Bangladeshi workers out of oil and gas revenues that themselves depend on Hormuz exports. A sustained price shock that interrupts Gulf hydrocarbon revenue compresses the construction, hospitality and domestic-services sectors in which most Bangladeshi workers are employed, with a 6 to 12 month lag on hiring and a 3 to 6 month lag on overtime hours and wage growth.

The historical reference is 2014-2016. The Brent price collapse from $115 to $30 between June 2014 and February 2016 triggered a sharp slowdown in Saudi public-sector contracting, which was the dominant employer of Bangladeshi workers at the time. Bangladesh's monthly outbound migrant flow to Saudi Arabia fell from approximately 50,000 in 2015 to under 10,000 in 2017. Per-worker remittance flow fell about 8 to 12 percent in real terms over the same period. The shock to family budgets in Comilla, Chittagong, Sylhet, Brahmanbaria and Noakhali, the five highest remittance-receiving districts, was material and persistent.

A Hormuz event that produces a Brent shock of similar magnitude would reproduce that pattern with a six to twelve month lag. A 10 percent reduction in GCC remittances is approximately $1.5 to $1.8 billion per year of lost forex inflow, plus household income loss to roughly 1.0 to 1.2 million Bangladeshi receiving families. This is the largest channel in the analysis. It is also the channel for which the policy lever set is the smallest, because remittance flows depend on labour demand in countries Bangladesh does not control.

2. Fertilizer and the Boro chokepoint

Bangladesh's domestic urea capacity has improved with the September 2023 commissioning of the Ghorasal-Polash plant (924,000 tonnes per year nameplate, MHI EPC, Japanese ODA), but the plant requires steady gas allocation that competes with power-sector winter peaks, and the legacy plants remain gas-constrained. Net domestic output runs at approximately 1.3 to 1.5 million tonnes against a 2.6 mtpa demand. The remainder, roughly 1.1 to 1.3 mtpa, is imported, with more than half of that volume in normal years coming from Saudi Arabia, Qatar and the UAE.

The Hormuz transit risk on urea operates in two stages. Stage one is the price stage. A closure event lifts global urea prices because the Gulf supplies roughly 40 percent of seaborne urea. Even a partial closure of two to four weeks, with full clearance and resumption afterwards, has historically been sufficient to push spot urea prices up by 60 to 100 percent. The second-quarter 2022 spot urea peak of approximately $925 per tonne, against a 2021 average near $390 per tonne, was driven by gas-price contagion and Russia sanctions, not by Hormuz, but it provides a usable upper-bound benchmark for what a Hormuz event of comparable severity would cost.

Stage two is the volume stage. Even if Bangladesh is willing to pay the higher price, the physical urea has to arrive on schedule for the Boro fertilizer window. A 30-day disruption of Saudi and Qatari loadings forces BCIC to draw down working stock, which is not large; current working stock at the BCIC level is typically 30 to 45 days of consumption, and not all of it is positioned in the right warehouses. Reroute via alternative suppliers (Russia, Indonesia, Egypt) requires 30 to 50 days of additional shipping time even if a contract can be signed immediately, plus a documentation and letter-of-credit cycle that, at Bangladesh Bank's current FX backlog, often takes two to three weeks more.

The honest exposure assessment for urea is therefore not "we can absorb a brief event because we have stock." It is: a Hormuz disruption that begins between mid-January and end-February in any given year, the window before the second Boro topdressing, is the worst possible timing for Bangladesh's annual rice supply. Outside that window, the country has the time to find substitutes, even at higher prices. Inside that window, the time runs out before the substitutes arrive.

3. LNG and the power grid

LNG is the harder energy case. Bangladesh's two FSRU terminals at Moheshkhali (Excelerate's Excellence and Summit's Summit LNG) have a combined regasification capacity of approximately 1,000 million cubic feet per day, which is around 25 to 30 percent of national gas supply. Of the LNG arriving at those terminals, the combined Qatar long-term volume (~4.3 mtpa across both SPAs) is structurally exposed to a Hormuz closure; the Oman contract (1.0 mtpa) is not. Spot LNG cargoes float at the global price, and a Hormuz event prices spot LNG by global contagion: in the 2022 Russia-Ukraine episode spot Asian LNG (JKM) traded at $50 to $80 per MMBtu against a pre-shock baseline near $13. Replacing even a fraction of the Qatar volume at JKM-spot during such a contagion runs into the multiple billions of dollars per year of incremental forex outflow, well above the entire LNG subsidy budget.

The downstream effect of an LNG shortfall is power, not households. Households in Bangladesh do not directly consume LNG; the gas grid is fed from a mix of domestic Bibiyana-and-related fields and imported LNG. The shortfall hits power generation, which currently runs roughly 10,000 to 12,000 MW of gas-fired capacity that depends on combined domestic-and-LNG grid pressure. A Hormuz event therefore drives load-shedding before it drives household gas rationing, with the 2024 summer load-shedding episode (extended outages of 4 to 8 hours per day in many districts) as the cleanest recent reference. For Boro, the load-shedding effect is direct: irrigation pumps run on grid electricity in the dry months, and load-shedding in February-March directly reduces water delivery to the haor and northwest paddy belts during the critical heading-and-grain-fill stage.

4. Crude, diesel and shipping

The crude oil exposure to a Hormuz event is large in dollar terms but smaller in second-order welfare terms than the fertilizer exposure, for two reasons. First, refined-product substitution is fast: BPC and private-sector importers can switch to Singapore-cargo HSD and Russian Urals product within a delivery cycle of 10 to 15 days, paying a price premium but not facing physical scarcity. Second, the irrigation pump load that matters most for Boro is diesel, and the diesel inventory at BPC depots is structurally larger than urea inventory at BCIC depots; the country typically runs roughly 25 to 30 days of forward diesel cover, well below the 90-day IEA member-country norm but enough to bridge a Scenario A event.

The shipping cost channel is independent of the diesel channel and often forgotten. A Hormuz event raises war-risk insurance premiums on every vessel transiting the Gulf, and bunker fuel for global container shipping (380cst HSFO and VLSFO) follows the Brent price with roughly a one-month lag. Bangladesh's container exports out of Chittagong and Mongla face freight increases of 15 to 30 percent in a Scenario B-class event, on top of a 10 to 20 percent direct insurance premium increase. The pass-through to apparel buyer prices is partial and lagged; the absorption falls on factory-level margins.

5. RMG export competitiveness

Bangladesh's $46 to $48 billion ready-made garment export sector (roughly 84 percent of total goods exports in FY 2024-25) is exposed to a Hormuz event through three layers. First, factory captive power, which is heavily natural-gas fuelled and therefore competes for the same constrained gas supply that load-shedding hits. Second, dyes, accessories and cotton inputs that use container shipping at the freight rates above. Third, buyer-price pass-through that does not happen, because Vietnam and India face the same shock and competitive pricing collapses to the floor. The apparel sector's published margins of 3 to 6 percent at the factory gate cannot absorb a sustained 5 to 10 percent input-cost increase without either sub-sector consolidation, factory closures in the marginal segment, or a wage-freeze response that reverberates politically. None of these is a small consequence.

6. Edible oil and the broader food basket

Bangladesh imports approximately 85 to 90 percent of its edible oil consumption, dominated by crude palm oil (Indonesia and Malaysia) and soybean oil (Argentina and Brazil). None of these flows transits Hormuz. The exposure is indirect, through global price contagion: edible oil prices co-move with global oil prices through three channels (transport fuel, fertilizer for the source crop, and substitution from biodiesel demand). The 2022 episode pushed crude palm oil from approximately $1,150 per tonne in late 2021 to over $1,800 per tonne in March-April 2022, an increase that transmitted to retail edible oil within six to eight weeks. Bangladesh's edible oil import bill of roughly $2.5 to $3.0 billion per year scales directly with the global price; a 60 percent edible oil price spike adds approximately $1.5 to $1.8 billion of incremental forex outflow over a 12-month window, and adds Tk 20 to 35 per litre at retail.

Lentils (masoor dal), sugar and onions follow similar but milder co-movement patterns. The household food-basket impact of a Hormuz event extends well beyond rice.

7. Aviation, Hajj and Biman

Bangladesh's Hajj quota in recent years has run at approximately 127,000 to 138,000 pilgrims, with the season landing in May-July depending on the Islamic calendar. The 2026 Hajj season opens in late May. Biman's fuel bill scales directly with jet fuel cost, and the carrier's published operating margins are thin enough that a 30 percent jet fuel spike for the duration of a Hormuz event raises Hajj operating cost by approximately Tk 600 to 1,200 crore on the Hajj operation alone, not counting general route operations. The political sensitivity of Hajj cost to the public is high.

The macro defence: BDT, reserves, LC backlog

The first line of defence against a Hormuz shock is the foreign exchange reserve. Bangladesh entered 2026 with gross reserves in the $32 to $36 billion range, with BPM6 net cover materially lower in the $26 to $30 billion range. Import cover is roughly 4 to 5 months at current import levels, which is reasonable but not abundant. The IMF Extended Credit Facility and Resilience and Sustainability Facility programme that Bangladesh entered in early 2023 added approximately $4.7 billion of disbursable cover spread across reviews, of which most has been disbursed. Additional bilateral support (China, India, World Bank IBRD-equivalent) is available but slow.

The second line of defence is exchange rate flexibility. The BDT was effectively pegged at Tk 84 per USD until mid-2022 and now trades in a managed band around Tk 119 to 122 per USD. A Hormuz event of Scenario B magnitude would push the BDT toward Tk 130 to 135 per USD on a 60-day window. The pass-through to retail inflation, on conventional pass-through coefficients of 0.3 to 0.5 for Bangladesh, would add 3 to 7 percentage points to headline inflation within six months.

The third line of defence is the LC backlog management at Bangladesh Bank. The backlog of foreign-exchange import letters of credit, which became visible during the 2022-2024 reserve drawdown, is the rationing mechanism. A Hormuz event would tighten this rationing further, with priority to fertilizer, food, energy and pharmaceutical imports, and corresponding squeeze on machinery, vehicles, intermediate goods and consumer durables. The trade-off is between defending the BDT and defending domestic supply.

Three scenarios, priced

The scenarios that follow are anchored to real historical episodes and stated as stress tests, not forecasts. Assumptions are explicit so the reader can adjust them.

Scenario A: Mining and clearance, 7 to 10 days

The reference event is the 1987-88 Tanker War period, scaled to current shipping. Iran lays sea mines in the Hormuz approach, the US Fifth Fleet (Manama) mounts a clearance operation, and traffic resumes within 7 to 10 days at modestly higher war-risk insurance premiums. Spot oil prices spike on day one, peak around day four or five, and decay back to trend within 30 days. There is no sustained physical shortage of Gulf cargoes because the shipping queue clears as soon as the strait opens.

For Bangladesh, the import effect is small in volume but visible in price. BPC pays a war-risk premium estimated at 0.5 to 1.0 percent of cargo value for any vessel transiting the strait during the event window; the freight surcharge alone is approximately $25 to $40 million on annualised crude imports if the premium structure persists for a quarter. Urea pricing rises modestly. Remittances are essentially unaffected because Gulf hiring decisions operate on quarterly or longer cycles. Edible oil and rice retail are unaffected. The Boro impact is bounded: if the event lands outside the fertilizer window, no measurable yield effect.

Scenario B: Partial closure, 30 days

The reference event is a sustained Iranian attempt to interdict tanker traffic short of full closure: targeted UAV strikes, naval skirmishing, intermittent mining. The strait remains technically open but throughput drops to perhaps 40 to 60 percent of normal. War-risk insurance premiums double or triple. Some shippers refuse Hormuz-loaded cargoes outright; others reroute to Saudi East-West pipeline-loaded cargoes from Yanbu (Red Sea). Spot oil sustains at $130 to $160 per barrel for the duration. JKM spot LNG rises to $40 to $60 per MMBtu. Spot urea moves to $700 to $900 per tonne. Crude palm oil rises 30 to 50 percent.

The bill comes due across all seven channels. The table below states each channel's incremental cost as a positive forex burden. The remittance row is a lost inflow, not an import outflow, but it lands on the balance of payments with the same sign as an extra import bill, so it is added as a positive cost; it is not double-counted against any outflow line.

Channel	Baseline (annualised)	Scenario B (annualised, 30-day event)	Incremental forex burden
Crude and product imports	$4.5B	$5.5 to 6.0B	$1.0 to 1.5B
LNG imports	$1.5B	$2.5 to 3.5B	$1.0 to 2.0B
Urea, DAP, MOP imports	$1.0B	$1.6 to 2.0B	$0.6 to 1.0B
Edible oil imports	$2.7B	$3.7 to 4.3B	$1.0 to 1.6B
RMG margin compression	break-even	($0.3 to 0.6B) lost margin	$0.3 to 0.6B
GCC remittances (6-12 mo lag, partial)	$16.5B inflow	$14.5 to 15.5B inflow	$1.0 to 2.0B lost inflow
Aviation, Hajj, Biman	$0.4B	$0.5 to 0.6B	$0.1 to 0.2B
Total forex impact (incremental)	-	-	$5.0 to 8.9B

The incremental forex impact of $5.0 to $8.9 billion in a Scenario B event is approximately 14 to 28 percent of Bangladesh's gross foreign exchange reserves ($5.0B against the $36B upper bound, $8.9B against the $32B lower bound). This is a serious shock even at 30 days. It is not manageable without a combination of LC rationing, BDT depreciation, and emergency external support.

The Boro yield effect in Scenario B depends on timing. If the event runs through February-March of a Boro year, the missed second urea topdressing on smallholder paddy reduces yield by an estimated 12 to 18 percent on the affected portion of the crop, equivalent to 1.0 to 1.6 million tonnes of milled rice. Valued at the Karwan Bazar coarse-rice wholesale price of approximately Tk 56 per kilogram (Tk 56,000 per tonne of milled rice, April 2026 reference), the gross production loss is on the order of Tk 5,600 to 9,000 crore (1.0 Mt milled at Tk 56,000/t is Tk 5,600 crore; 1.6 Mt is Tk 8,960 crore). The loss is stated in milled-rice terms and priced at the milled coarse-rice retail benchmark, not at paddy.

Scenario C: Full closure, 90 days

The reference event is full Iranian closure of the strait following a major escalation, sustained for 90 days before clearance and traffic restoration. This is at the upper end of credible scenarios; sustained closure beyond 90 days requires assumptions about Iranian regime survival that are outside this analysis. Spot oil moves to $180 to $220 per barrel. JKM LNG breaches $80 per MMBtu. Spot urea exceeds $1,000 per tonne. Crude palm oil approaches the 2022 peak of $1,800. The Saudi East-West pipeline runs at its 5 to 7 mbpd ceiling but cannot replace 70 percent of normal Hormuz throughput; physical scarcity, not just price, becomes a feature of global oil and LNG markets.

For Bangladesh, Scenario C is a balance-of-payments event before it is a Boro event. The full incremental import bill, if Bangladesh attempts to maintain physical supply at any price, runs to $15 to $25 billion of additional forex outflow over the 90-day window plus the 12-month remittance lag, equivalent to a depletion of 45 to 75 percent of gross reserves. This is not a feasible defence. The realistic outcome is a combination of partial volume reduction (rationing of LNG to power, of fertilizer to non-Boro applications, of diesel to non-essential transport, of edible oil through TCB-only distribution), a sharp BDT depreciation (15 to 30 percent against the dollar), an emergency IMF or bilateral facility, and aggressive substitution to non-Hormuz suppliers at whatever price they offer.

The Boro yield effect in Scenario C is large and propagates. Direct fertilizer-driven yield loss runs to 2.0 to 3.0 million tonnes of milled rice. Indirect effects (irrigation load-shedding, diesel-pump cost, working-capital constraint on smallholder credit) add 0.5 to 1.0 million tonnes. The aggregate Boro shortfall is 2.5 to 4.0 million tonnes of milled rice, against a normal Boro milled-rice supply of approximately 13 to 14 million tonnes (from roughly 20 to 22 million tonnes of paddy). A roughly 18 to 30 percent national Boro shortfall is the kind of supply event that, on the 2017 and 2007 precedents, drives a 30 to 50 percent retail price increase in coarse rice over the following 6 to 9 months, even with normal Aman in the autumn.

The Boro paddy chokepoint, in detail

What makes Hormuz a food story rather than a fuel story is the calendar lock on Boro fertilizer.

Boro is the dry-season rice crop, sown between mid-November and mid-February depending on agro-ecological zone, transplanted into puddled fields, and harvested between mid-April and end-May. Across the country, the crop covers approximately 4.8 million hectares and produces roughly 20 to 22 million tonnes of paddy annually, equivalent to approximately 13 to 14 million tonnes of milled rice at the standard milling ratio. This is 52 to 55 percent of national rice supply and a higher share of marketed surplus, because Aman and Aus crops have a larger subsistence component.

The crop's two urea topdressing applications are timed to nitrogen demand at tillering (first topdressing, 20 to 25 days after transplanting) and at panicle initiation (second topdressing, 35 to 45 days after transplanting). In a typical Boro calendar in Bangladesh, the second topdressing falls between mid-February and mid-March. This is the application that cannot be skipped without measurable yield loss; the first topdressing is partially substitutable by adjusted basal fertilizer placement, the second is not.

The DAE recommended urea dose for high-yielding-variety Boro is approximately 260 to 300 kilograms per hectare, of which the second topdressing accounts for roughly 90 to 110 kilograms per hectare. At an import-equivalent urea price of $400 per tonne (baseline), that is approximately Tk 4,900 of fertilizer cost per hectare for the second topdressing alone. At Scenario B's $850 per tonne, the same 100 kg of urea costs Tk 10,400 per hectare. The smallholder Boro grower facing a doubled topdressing cost in a single planting cycle, with no advance warning and no formal credit access, has three choices: pay (and reduce other inputs), borrow at informal rates of 10 to 15 percent per month, or skip. Field studies of the 2008 fertilizer price shock and the 2022 Russia-Ukraine episode both find skip rates of 20 to 35 percent among smallholders under topdressing-cost shocks of comparable magnitude.

The yield loss from a skipped second urea topdressing in a high-yielding Boro variety is documented in BRRI agronomic trials at approximately 18 to 25 percent. Applied to 25 percent of national Boro area in Scenario B, that is roughly 1.0 to 1.4 million tonnes of milled rice lost, in line with the scenario number above.

Price transmission to households

The 2022 reference is the cleanest available analogue. The Russia invasion of Ukraine in February 2022 was not a Hormuz event, but its transmission through Bangladesh's food prices ran through the same channels: imported fertilizer (urea price tripled), imported energy (HSD price doubled), and imported food oil (palm oil price doubled in three months).

Three transmission lines are worth tracking explicitly.

Coarse rice retail in Dhaka. The price had been trading near Tk 46 to 48 per kilogram in late 2021, and settled in the Tk 52 to 54 range through late 2022, a roughly 12 to 17 percent increase at the coarse end. Medium and fine rice rose more steeply, with medium rice crossing Tk 60 per kilogram. The increase persisted; coarse rice did not return to its pre-shock level in the subsequent two years.

Edible oil retail. Bottled soybean oil retail in Dhaka moved from approximately Tk 165 per litre in late 2021 to over Tk 220 per litre by mid-2022, an increase of roughly 35 percent. Loose palm oil moved similarly. The pass-through to ghee and packaged biscuits, which use palm oil as input, lagged by 8 to 12 weeks but was substantial.

Diesel and CNG retail, transport fares. HSD retail moved from Tk 80 to Tk 109 per litre in August 2022, after government adjustment, with the corresponding bus fare and intercity transport increase. The transport-cost pass-through to wholesale food prices in upcountry mandis added another 4 to 8 percent on top of the input shock.

Two features of the 2022 transmission are worth keeping in front of the policymaker. First, the lag from input shock to retail rice was approximately four to six months. Hormuz events with February-to-March timing would follow a similar lag, with retail price effects most visible in the August-October window of the same year. Second, the price floor was sticky on the way down. Once retail coarse rice moved above Tk 60, it stayed there even as international urea and oil prices retreated; pass-through is asymmetric because milling, transport and retail margins absorb price increases more readily than they release them.

The implication is that a Hormuz-driven shock during the Boro window in early 2027 would produce its retail rice and edible oil peaks in late 2027, and a partial decline in 2028 that does not return prices to the pre-shock level. The fiscal cost of TCB open market sales sufficient to hold retail coarse rice at Tk 50 per kilogram and bottled soybean oil at Tk 175 per litre during such an episode runs to Tk 12,000 to 18,000 crore over a 12-month window, on rough proportionality to the 2022-2023 episode and the larger TCB beneficiary base in 2027.

What Bangladesh has done about Hormuz risk

The Tarique Rahman government (BNP, sworn February 17, 2026) is managing this as an active emergency, not a future risk. As of May 2026, BCIC has cancelled scheduled urea tenders and is negotiating emergency procurement from Egypt, Indonesia, and Russia. Petrobangla secured two prompt spot LNG cargoes in late March at $23 to $28 per MMBtu, and has begun ramping coal-fired generation capacity as a partial buffer. The honest assessment of pre-crisis preparation is: relatively little, although the country had made some structurally useful moves on adjacent risks for unrelated reasons.

Strategic petroleum reserve. Bangladesh's effective forward-cover for petroleum products at the BPC depot system is approximately 25 to 30 days. This is well below the 90-day IEA norm for member countries. There is no announced national strategic petroleum reserve programme that would expand this cover meaningfully on a 5-year horizon.

Fertilizer buffer stocks. BCIC working stocks of urea typically run 30 to 45 days of national consumption, varying seasonally and by warehouse position. The level was last reviewed publicly in the wake of the 2022 shock, when the government raised the working stock target by 15 percent, but the increase has been variably implemented. There is no DAP or MOP equivalent buffer; phosphate and potash imports run hand-to-mouth.

LNG supply diversification. The Oman long-term contract (1.0 mtpa from Qalhat, signed 2018, deliveries from 2019) is the single most important Hormuz hedge Bangladesh has, and it is structural: Qalhat is east of the strait and therefore not directly exposed to a closure. Petrobangla has explored additional Indian Ocean and US Gulf supplier contracts but has not signed long-term volumes that would move the Hormuz exposure share materially below the current ~80 percent of long-term contracted volume.

Fertilizer supplier diversification. Bangladesh has signed government-to-government urea supply MOUs with Russia and Indonesia (PIM), and informal cross-border urea trade with Iran continues despite the sanctions environment. None of these diversifications is large enough to displace the Saudi-Qatar-UAE share in a 30-day window.

Domestic urea capacity. The Ghorasal-Polash Urea Fertilizer Project (Japanese ODA, MHI EPC, KAFCO heritage) was inaugurated in September 2023 and has been ramping toward its 924,000 tonnes per year nameplate capacity. At full operation it displaces roughly one-third of current import demand and reduces Hormuz exposure on urea proportionally, but the displacement requires steady gas allocation, which competes with power-sector winter peaks. A new greenfield urea plant of comparable scale is not on the construction calendar.

Migrant labour diversification. Bangladesh's overseas employment policy (BMET, MoEWOE) has explicitly tried to reduce GCC concentration through agreements with Malaysia, Singapore, Japan, South Korea, Romania, Croatia and Mauritius. The flows have grown but remain small relative to the GCC stock. As of 2025, the GCC still accounts for roughly 75 percent of new overseas employment placements and 60 to 65 percent of remittance flow.

Food and edible oil buffer. TCB's open-market sale operations are the household-level stabiliser, with a beneficiary base of roughly 10 million family cards. The forward stock of rice and edible oil for TCB sales runs at 60 to 90 days of operational throughput, which is the binding constraint on how long an OMS programme can be sustained without import-side renewal.

Forex reserves and IMF programme. Gross reserves are in the $32 to $36 billion range with BPM6 net cover lower. The IMF ECF/RSF programme entered in early 2023 has provided approximately $4.7 billion in disbursable support over the programme period, most of it now drawn. There is no contingent or standby facility specific to a Hormuz-class shock.

The aggregate read of the preparation list is that Bangladesh has partial diversification on the LNG and urea lines, no meaningful strategic petroleum reserve, no DAP or MOP buffer at all, no labour-source diversification at scale, a moderately healthy reserve cushion that becomes stressed in Scenario B and depleted in Scenario C, and a TCB forward stock that runs out at 60 to 90 days into a sustained shock. The country is positioned for Scenario A. It is not positioned for Scenario B. It is exposed in Scenario C.

A six-month preparation package, costed against doing nothing

Suppose the government, on the basis of an intelligence assessment that places Hormuz disruption probability at a non-trivial level over the November 2026 to October 2027 window, decides to act now. What does a defensible six-month preparation package look like, and what does it cost, against the cost of doing nothing and absorbing Scenario B?

A defensible package has eight lines. Five are inventory or contracting one-time outlays; three are policy instruments with low or zero direct cost. Each line below names the owner and the success signal that would confirm it worked.

One. Pre-position 60 days of incremental urea (owner: BCIC). Pre-position an additional 60 days of national urea consumption in BCIC warehouses, sourced from non-Hormuz suppliers (Russia, Indonesia, Egypt, Vietnam) on a forward contract basis. Volume: approximately 430,000 tonnes of incremental working stock above current targets. Cost at $400 per tonne: approximately $172 million, equivalent to Tk 2,100 crore at Tk 122/USD. Success signal: verified physical stock of 90 to 105 days of consumption positioned across the divisional warehouses by 31 December 2026, ahead of the February topdressing.

Two. Build the missing DAP and MOP buffer (owner: BCIC). Pre-position 30 days of incremental DAP and MOP buffer, given that current buffer is effectively zero. Volume: approximately 90,000 tonnes combined, at a blended price of roughly $475 per tonne. Cost: approximately $45 to $55 million (Tk 550 to 670 crore). Success signal: a non-zero phosphate and potash buffer of at least 30 days reported in the BCIC monthly stock return by January 2027.

Three. Sign one non-Hormuz long-term LNG contract (owner: Petrobangla). Sign one additional long-term LNG supply contract with a non-Hormuz supplier (US Gulf, Australia, Equatorial Guinea), 1.0 to 1.5 mtpa, delivered ex-FSRU. The structural pricing premium against current Qatar contract terms is roughly $1 to $2 per MMBtu. Annualised incremental cost on a 1.2 mtpa volume: $70 to $140 million per year (Tk 850 to 1,700 crore per year), although this is a permanent line item, not a one-time package cost. Success signal: long-term contracted Hormuz-exposed LNG share falling below 70 percent of contracted volume within 12 months of signature.

Four. Pre-negotiate an IMF Rapid Financing standby (owner: Finance Division and Bangladesh Bank). Negotiate IMF Rapid Financing Instrument standby arrangement in the $1.0 to $2.0 billion range, contingent on a defined triggering event (Hormuz closure exceeding 14 days). Cost in normal times: zero. Cost in an event: standard RFI terms. Success signal: a signed contingent term sheet on file before the November 2026 window opens.

Five. Protect dry-season gas to the urea plants (owner: Energy Division and Power Division). Stabilise gas allocation to Ghorasal-Polash and the legacy BCIC urea plants through a Boro-window priority directive that protects the dry-season fertilizer feedstock from being diverted to power. The cost is operational, not capital, and the benefit is roughly 200,000 to 300,000 tonnes per year of additional realised domestic urea output. Imputed forex saving: $80 to $120 million per year. Success signal: realised domestic urea output in the January-March quarter at least 200,000 tonnes above the prior-year same-quarter level.

Six. Deepen the TCB rice and oil forward stock (owner: TCB and Ministry of Commerce). Establish a six-month forward TCB rice and edible-oil stock at 50 percent above current operational target, sourced now at current prices to insulate against the lag from import shock to retail. Cost: approximately $220 million (Tk 2,680 crore) for the incremental procurement, double the rice-only sizing because edible oil is now in scope. Success signal: TCB forward cover of 120 to 135 days of operational throughput confirmed by January 2027.

Seven. Secure a no-mass-deportation labour understanding (owner: MoEWOE and Foreign Ministry). Bilateral labour facility with Saudi Arabia, UAE, Qatar and Oman governments to formalise a no-mass-deportation, no-contract-cancellation understanding for Bangladeshi workers in the event of a Gulf liquidity shock, in exchange for Bangladesh's continued labour supply commitment. Cost: zero (diplomatic). Benefit: avoidance of the worst-case remittance collapse, on the order of $1.0 to $2.0 billion per year of preserved inflow. Success signal: signed memoranda with at least the two largest hosts (Saudi Arabia and the UAE) before the window opens.

Eight. Pre-publish the LC priority list (owner: Bangladesh Bank). Activate a Bangladesh Bank LC priority list explicitly ranking food, fertilizer, fuel and pharmaceuticals at the top, with apparel-input intermediate goods at the second tier and consumer durables at the bottom, communicated to the banking sector in advance so the rationing is predictable and not crisis-managed. Cost: zero. Benefit: avoidance of the worst-case industrial disruption from disorderly LC rationing. Success signal: a circular issued to authorised dealers stating the priority tiers before any event.

The aggregate one-time cost of the inventory-and-contracting package (Lines 1, 2, 6) is on the order of Tk 5,330 to 5,450 crore (approximately $437 to $447 million), with permanent recurring costs of Tk 850 to 1,700 crore per year for the LNG diversification (Line 3). Lines 4, 5, 7 and 8 are policy instruments with zero or operational direct cost.

The cost of doing nothing and absorbing Scenario B (the moderate scenario, 30-day partial closure) was estimated above at approximately $5.0 to $8.9 billion in incremental forex impact (across all seven channels) plus Tk 5,600 to 9,000 crore in lost Boro production plus Tk 12,000 to 18,000 crore in TCB stabilisation cost. The aggregate cost, in taka equivalent, is approximately Tk 80,000 to 130,000 crore for a single Scenario B event landing in a Boro window, with the remittance and edible oil components driving most of the upward revision from the original fertilizer-only sizing.

The benefit-cost ratio of the preparation package, against the moderate scenario, is on the order of 15 to 25 times. Against Scenario C, the package's benefit-cost is meaningfully higher and the package itself is insufficient (a Scenario C response requires IMF programme conversion, bilateral support beyond what is currently arranged, and multilateral coordination beyond anything assembled in 60 days).

The case against acting now

The strongest counterargument is that the package buys insurance against a tail. A Hormuz closure long enough to span the February-March Boro window is a low-probability event in any single year, and pre-positioning 430,000 tonnes of urea and 90 days of TCB cover ties up working capital and warehouse space that has its own carrying cost and spoilage risk. If the strait reopens quickly, as it did in every prior Tanker-War-class episode, the country has paid for inventory it did not need and faces the resale discount on perishable food stock.

Two facts answer that. First, the carrying cost is small against the loss it hedges: the one-time outlay is Tk 5,330 to 5,450 crore against a Scenario B loss of Tk 80,000 to 130,000 crore, so the package pays for itself if it prevents even one event in roughly twenty Boro cycles. Second, several lines are not pure insurance. The DAP and MOP buffer (Line 2) closes a standing gap that exists regardless of Hormuz, the LNG diversification (Line 3) reduces structural exposure permanently, and the gas-allocation directive (Line 5) raises realised domestic output every dry season. Those lines hold value even if the strait never closes again.

What would change the conclusion is timing. If the Hormuz disruption resolves before the November 2026 to October 2027 window, the urgency falls away and the package can be scaled back to the no-regret lines (2, 3, 5, 8). The case for the full package rests on the disruption persisting or recurring into that window, which is the specific risk the dating of this analysis is built around.

Closing

The Hormuz risk is, for Bangladesh, miscategorised on two levels. It is not a fuel-price risk; it is a Boro-paddy-and-remittance risk that rides on fertilizer, electricity, edible oil and Gulf wages. The miscategorisation matters because the policy response to a fuel-price risk is petroleum reserves, dual sourcing and BPC working capital. The policy response to the actual risk is BCIC warehouse position, second-urea-topdressing field cover, irrigation electricity priority during the dry season, TCB stabilisation depth at the wholesale level, a bilateral labour-protection understanding with the GCC governments, and an LC priority list at Bangladesh Bank. The two action lists overlap by perhaps thirty percent.

The most expensive thing Bangladesh can do about Hormuz is what it is currently doing, which is treating it as an oil story while the urea, DAP, LNG, edible oil, RMG and remittance lines remain exposed. A modest, time-bounded, six-month preparation package, costing on the order of $437 to $447 million in one-time outlay, has a defensible 15-to-25-times return against the moderate scenario alone. It is not a hedge against geopolitical certainty. It is a hedge against the specific bad luck of a Hormuz event landing inside a Boro fertilizer window. The next such window opens in February 2027.

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This analysis is the second piece in the Policy Analysis series. The first piece, The Boeing Bill, sets out the case on the April 2026 Biman-Boeing contract. A short Bangla companion to this analysis, intended for newspaper readership, is available as হরমুজ যদি বন্ধ হয়, বোরো কত খাবে.

Sources

• 2026 Strait of Hormuz crisis, Wikipedia: Iran announced the closure on 4 March 2026; tanker traffic collapsed by more than 90 percent within days; approximately 20,000 mariners and 2,000 ships stranded as of 21 April 2026 (International Maritime Organization).
• Bangladesh races to secure fertiliser amid Hormuz uncertainty, The Daily Star: BCIC cancelled urea tenders; government urgently seeking supplies from Egypt, Indonesia, Russia.
• Bangladesh seeks alternatives as Mideast war disrupts fertiliser imports, The Business Standard: Middle East granular urea prices rose 19 percent in the first week of March 2026; Egyptian urea surged 28 percent.
• Modelling the Impact of the Strait of Hormuz Closure, Oxford Institute for Energy Studies, March 2026: Scenario modelling of oil and LNG price pathways under partial and full closure.
• The Cost of Closing the Strait of Hormuz, Kiel Institute for the World Economy, March 2026: GDP and trade-flow cost estimates for Hormuz closure scenarios.
• Bangladesh ramps up coal power as LNG imports face uncertainty, The Business Standard: Petrobangla emergency measures; spot LNG procurement at premium prices.
• FAO Chief Economist warns of severe global food security risks from Hormuz disruption, FAO, 2026: Global fertilizer price projections 15 to 20 percent higher in H1 2026 if crisis persists.
• How dependent is Bangladesh on Middle East oil, gas, The Daily Star: Bangladesh sourced 80 percent of crude oil, 65 percent of LNG, and 51 percent of LPG from the Middle East in FY2025-26 (first eight months).
• Gross foreign exchange reserves of Bangladesh, Bangladesh Bank Financial Stability Report 2024: At end-December 2024, gross foreign exchange reserves stood at USD 26.21 billion on the BPM6 net measure, covering more than four months of import payments. Gross reserves on the broader measure ran in the $32 to $36 billion range entering 2026.