Bangladesh Bank has warned that ongoing conflict in the Middle East has intensified global oil market volatility, posing potential risks to Bangladesh’s economy. In its quarterly report released Wednesday, the central bank projected that rising oil prices and continued currency depreciation could accelerate domestic inflation and deplete foreign exchange reserves.

According to the analysis, if global oil prices rise by 70 percent in the first quarter of 2026 and by another 30 percent in the second quarter, domestic fuel prices may increase significantly. A sustained five percent depreciation of the exchange rate during the same period could push inflation up by 0.5 to 2 percent by the end of 2026. The report noted that if the government absorbs the global oil price shock through fiscal measures, inflationary pressure could remain moderate.

The report further indicated that higher energy import costs and central bank interventions to stabilize the exchange rate could reduce reserves by about 6.5 billion dollars by December 2026. Bangladesh Bank emphasized the need for policy preparedness, suggesting flexible exchange rates and partial fuel price adjustments to maintain macroeconomic stability.