The paper analyses the impact of the steep rise in oil prices that has taken place since 1973 on the terms of trade, balance of trade and the capacity to pay for imports out of export receipts of Bangladesh. It shows that the country would have faced a deteriorating terms of trade even in the absence of such a rise in oil prices, but this phenomenon has made things much worse for her. Not only her terms of trade deteriorated severely, her major exports suffered a setback and the reduced capacity to pay for imports led to a shrinking of the volume of crucial imports. The additional cost of imports due to higher oil prices was also quite substantial in relation to the country’s GDP, its growth and exports. Thus the rise in oil prices seems to have made substantial contributions to the country’s impoverishment during the seventies.