Letters of credit opened for petroleum and petroleum products rose 65 per cent to $3.7 billion in July-September from $2.28 billion a year earlier, as the Middle East war kept oil and gas prices high, Bangladesh Bank data show.

Orders for crude oil tripled to about $630 million in the first quarter of the current fiscal year from just over $200 million a year earlier. Letters of credit for other petroleum products, mainly gas, rose to $2.4 billion from $1.12 billion.

The increase reflects price, not volume. Fuel imports have barely changed, but each cargo now costs far more, according to The Daily Star's report on the central bank figures.

Actual payments rose less sharply than orders. Settlements of petroleum import letters of credit increased 26 per cent year on year to $2.93 billion in the quarter, reflecting the lag between an order and the arrival and payment of cargoes.

Brent crude averaged $97 a barrel in July-September, more than 40 per cent above $69 a year earlier, according to World Bank commodity price data. The average price of LNG in Japan rose to $14.45 per million British thermal units from $11.73.

Bangladesh meets more than a third of its gas demand through imports. QatarEnergy, its long-term supplier, has extended force majeure notices to Bangladesh until November, so the country has turned to the spot market, where LNG has cost about $30 per MMBtu - almost three times the pre-war level.

The pressure has already reached consumers. Last month the government raised the prices of all four major petroleum products by Tk 20 a litre, the biggest increase since August 2022. The Bangladesh Petroleum Corporation says supplies are assured until December and it sees no risk of a shortage.

Shafiqul Alam, lead analyst for Bangladesh energy at the Institute for Energy Economics and Financial Analysis, said the money spent on fuel could reach $18 billion to $20 billion this year, up from $12 billion to $13 billion. Higher LNG costs would also push up subsidies, he said.

Economist Selim Raihan, executive director of the South Asian Network on Economic Modeling, warned that a larger fuel bill could strain reserves, weaken the taka and feed inflation through transport, power and production costs. The World Bank expects Bangladesh's economy to grow 3.4 per cent this fiscal year, held back by energy shortages and higher costs.