Oil traverse three continents to reach Bangladesh, to sell with an extra Tk 9 per liter

Saudi Arabia's fuel oil is now reaching Bangladesh after journeying across three continents and two oceans. This is not a leisurely voyage driven by a love for maritime adventure; rather, oil tankers are compelled to set sail for Chattogram port out of sheer necessity amid Middle East crisis.

Previously, oil tankers could easily travel from Saudi Arabia to Chattogram through the Strait of Hormuz. However, following the Iran-US conflict, the Strait became blockaded, halting oil shipments through that route. As an alternative, Bangladesh began importing oil via the Bab el-Mandeb Strait in Yemen, bypassing Hormuz. But after the arrival of one lakh tons of oil, that route too was shut down by Yemen's Houthi rebels.

With no other option, the tanker 'MT Ninemia' is now navigating a complex and difficult alternative route, carrying one lakh tons of oil towards Bangladesh. This route is set to become one of the longest and most unprecedented in international maritime trade history. Departing from Saudi Arabia's Yanbu port, the ship has already traversed the Suez Canal. It will then enter the Atlantic Ocean via the Mediterranean Sea and the Strait of Gibraltar. Skirting the entire western coast of Africa, it will round the Cape of Good Hope in South Africa. It must also cross the Indian Ocean, finally traversing the Bay of Bengal to reach Chattogram port. The ship will have to cover 14,000 nautical miles, taking an estimated 55 days.

Under the normal route, importing oil from Saudi Arabia took only 12 days. Now, it is taking nearly five times longer. This lengthy detour incurs a massive cost, which will be added to the price of fuel oil. The government will then have to sell it at a higher price; otherwise, it will have to bear the additional transport costs itself.

According to the annual government-to-government agreement between Bangladesh and Saudi Arabia, the government typically spends an average of 73 to 74 million US dollars to purchase one lakh tons of crude oil from the Saudi state-owned company, Saudi Aramco. At a rate of Tk 125 per dollar, this amounts to Tk 918 crore in Bangladeshi currency. Adding Tk 206 crore for transportation brings the total cost to Tk 1024 crore. Calculating the cost of this longest route, the price per liter of crude oil stands at approximately Tk 87.87. Previously, this oil was available at around Tk 78.84 per liter. Therefore, the increased transportation cost alone will add Tk 9 per liter to the price of crude oil.

Commodore Mahmudul Malek, Managing Director of Bangladesh Shipping Corporation (BSC), stated, "Hormuz is closed, Bab el-Mandeb is also closed. So this was our last option. We are forced to use this route and are paying a heavy price. We have to think about both ensuring the country's oil supply and bearing these costs." He added, "The shipowner has demanded 16.5 million US dollars (Tk 200 crore) as transportation costs for this three-continent voyage, which includes an extra charge of 3.5 to 4.5 million dollars. However, reminding them of this critical moment, they have agreed to decide on the final transport cost through discussions after the ship arrives in Chattogram."

Bangladesh imports crude oil under agreements from two countries. This oil is refined at the Eastern Refinery in Chattogram before being marketed. Previously, this oil used to come from Saudi Arabia's Ras Tanura port via the Strait of Hormuz to Chattogram.

Now, importing oil via this new three-continent route will incur significantly higher transportation costs alone. In this situation, Bangladesh is facing major complications in importing crude oil. Currently, the country is looking for alternatives, exploring options beyond the Middle East, such as Malaysia and African nations.