Bangladesh’s oil import bills to surge as Saudi Arabia makes crude costlier

State-owned oil giant Saudi Aramco raised prices for its Arab Light crude for delivery to Asia to $4.95 per barrel to make it costlier than the price of Oman and Dubai crude.

The development came at a time when the world’s energy supply chain has been severely disrupted due to the Russia-Ukraine war for the last 10 days.

The issue has appeared as a bane for Bangladesh which imports most of its crude oil from Saudi Arabia Aramco.

Bangladesh Petroleum Corporation (BPC) imports two grades of crude oil for producing different types of petroleum products through processing it at Eastern Refinery Limited in Chittagong, the country’s only state-owned refinery. These are: Arabian Light Crude Oil (ALC) and Murban Crude Oil (UAE).

According to BPC data, the country imported over 14.25 lakh tonnes of crude oil in 2021. Of which, nearly 7.97 lakh tonnes or 56 percent were from Aramco and the remaining 44 percent from the United Arab Emirates.

BPC data also shows Bangladesh’s crude oil imports from Saudi Arabia have increased by one lakh tonnes every year between 2019 and 2021, meaning that this over reliance on a single market may cost the country heavily this time.

The price hike comes as no surprise as Brent crude increased $17 a barrel in the last week alone. The market is getting further heated up as Russia, a major supplier in Europe, has been intensifying its attack in Ukraine that began on February 24.

Western countries’ sanctions on major Russian banks and companies made many buyers worried about sourcing oil from Russia.

Earlier last week, OPEC, a forum of oil-producing countries, decided not to increase daily outputs from the existing four lakh barrels per day.

Amid this situation, crude oil prices in global markets surged to $115 per barrel and the price of natural gas hit a new record.