As Jeff Currie, chief strategy officer at Carlyle Group, says: “You look at the paper markets. They’ve entirely disconnected from the physical markets. We’re dealing with an enormous supply shock.” Goldman Sachs and Citigroup have both warned that futures could hit the all-time 2008 record of US$147.50 if the conflict continues. Qatar’s energy minister Saad al-Kaabi forecast a US$150 price within two to three weeks if the Strait of Hormuz remains closed. Former IMF chief economist Olivier Blanchard has cited US$200.
This article argues that Singapore’s boards and management teams face not one shock but two — simultaneously.
The first is a cost shock: energy, raw materials, feedstocks and logistics costs rising sharply across every sector. The second is a demand shock: a global trade contraction threatening revenues at precisely the same moment. Together, they constitute a stagflationary squeeze — the most difficult economic environment to manage, because monetary tightening to combat inflation and fiscal support to arrest a slowdown directly contradict each other. For Singapore, with a trade-to-GDP ratio of 322%, the highest of any country in the world, that squeeze transmits with unusual speed and force. This is not a general commodity price problem. It is a structural shock to the foundations of Singapore’s economic architecture.
A supply chain cascade — far beyond oil
Most commentary has framed this as an oil price shock. That framing is too narrow.
Between March 1 and 18, only 98 ships transited the Strait of Hormuz, a 96% drop compared to the latter half of February, according to SP Global Market Intelligence. The International Energy Agency described this as “the biggest-ever oil supply disruption”. But crude oil is only the beginning. The Gulf also supplies 24% of global primary aluminium, one third of global synthetic fertiliser exports by volume, 30% of the world’s methanol, 45% of globally traded sulphur, and one third of global helium. Five commodity chains carry direct and immediate consequences for Singapore.
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The first chain: naphtha and the plastics-to-pharmaceuticals cascade. Naphtha, produced when crude oil is refined, is the feedstock for most plastics: packaging, food containers, bottles, PVC medical devices, syringes, catheters and intravenous drip bags. The Gulf supplies approximately 80% of Asia’s seaborne naphtha import demand. Industry sources report that Singapore manufacturers can no longer secure naphtha feedstock through conventional Middle Eastern channels. China has suspended all refined product exports, restricting what little naphtha remains to companies with existing Chinese operations. The Economist confirmed that China’s export suspension is already “turbocharging prices of petrol, diesel and jet fuel in Singapore, Asia’s oil-trading hub”.
The second chain: pharmaceuticals, active pharmaceutical ingredients (APIs) and healthcare inflation. The pharmaceutical consequences flow from the same petrochemical disruption. India, the world’s largest maker of generic medicines with a 20% share of global output, is directly exposed to China’s export suspension. According to India’s Federation of Pharma Entrepreneurs (FOPE), prices of active pharmaceutical ingredients have surged 20% to 60% within just eight to nine days. Chemical solvents and intermediates have become irregular in supply, disrupting factory production schedules. Packaging materials — PVC compounds, bottles, film, Alu-Alu blister packs and aluminium foil — have also seen sharp price increases. FOPE noted that these cost rises “have turned existing production contracts into loss-making arrangements”. Shipping costs for pharmaceutical exports from India have risen three to five times, with war surcharges of US$3,000 to US$5,000 per container now standard. India’s pharma industry estimates an export impact of US$300 to US$500 million if disruptions continue through March. Singapore, which imports a significant share of its generic medicines from India, will absorb these costs directly into its domestic healthcare system.
The third chain: helium and the semiconductor crunch. Qatar’s Ras Laffan facility supplied approximately 17 tonnes per day or one-third of global helium output. Helium is essential for cooling the superconducting magnets in semiconductor lithography machines; without it, chip fabrication cannot proceed. Alternative suppliers in the US, Russia and Algeria can collectively cover only approximately 25% of the shortfall, as they are already operating near full capacity. The crunch will arrive between Days 35 and 45, when distributor stock runs out. The semiconductor supply chain impact will extend into 3Q2026 regardless of any ceasefire. As leading helium analyst Phil Kornbluth notes: “The world cannot compensate for the loss of a third of its helium supply.”
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The fourth chain: aluminium and construction cost surge. The Gulf supplies 24% of global primary aluminium, and industry analysts had already flagged a 600,000-tonne supply deficit for 2026 before the conflict began. London Metal Exchange’s three-month aluminium futures surged as much as 10% in the two weeks following the outbreak, settling approximately 8% higher. The Singapore Contractors Association has confirmed construction material prices have risen approximately 20% and are expected to remain elevated. Some transport and machinery companies are facing losses of up to $1 million per month. One construction firm, United Tec Construction, reported delays of up to 10 days on material shipments due to vessel detours. Singapore, with multiple large-scale public infrastructure and residential projects underway, faces higher costs and longer lead times.
The fifth chain: fertiliser and food security. The Strait of Hormuz handles approximately one-third of global synthetic fertiliser exports. Unlike oil, where strategic petroleum reserves provide a release valve, there are no meaningful global fertiliser stockpiles that can be released quickly. Urea prices in Southeast Asia are already over 40% higher than pre-war levels. S&P Global Platts data as of March 19 shows Southeast Asia granular urea rising from US$490–US$498 per metric tonne before the conflict to US$750, a 52% increase in under three weeks. The agricultural consequence is irreversible: fertiliser that does not arrive in time for the 2026 northern hemisphere planting season cannot be used for this year’s harvest. Global food production costs will rise, and the price impact will land with a lag of one to two growing seasons, peaking in 2H2026 and into 2027. Singapore imports over 90% of its food. Every increase in global food production costs is transmitted directly to household expenditure and Consumer Price Index (CPI) with no domestic buffer.
Iran’s deliberate strategy — why a ceasefire is not a resolution
The most consequential analytical error boards are making is to assume that a ceasefire will promptly resolve these disruptions. It will not.
Iranian officials have become “reluctant even to discuss reopening the Strait of Hormuz as they focus on surviving the US-Israeli onslaught”, according to a person directly involved in high-level contacts with Tehran. Chatham House’s Sanam Vakil assessed that Iran will not stop without sanctions relief and guarantees against future attacks — “these are both very hard outcomes.” A Western official stated plainly: “They never knew they could close the Strait until they tried it. Now they know, and it’s pretty effective. The risk is, they will keep holding the world hostage.”
Iran’s targeting of Gulf energy infrastructure and economic chokepoints is not a miscalculation. It is deliberate horizontal escalation — imposing economic costs large enough to force US de-escalation, because Iran cannot win a military confrontation outright. The Strait of Hormuz has become Iran’s primary economic weapon.
Even if a ceasefire were declared tomorrow, the physical recovery is formidable. Independent analysis estimates the median time from ceasefire to full commercial resumption at 75 days: requiring mine clearance, reinstatement of war-risk insurance (cancelled by Lloyd’s from March 5), wellhead restarts of approximately 30 days, refinery restarts, and supply chain rebalancing in sequence. Qatar’s energy minister confirmed that damage to Ras Laffan will take three to five years to repair fully, at an estimated cost of US$20 billion per year in lost revenue, adding that the strikes have “set the region back 10 to 20 years”. Aluminium smelter restarts require six to 12 months. Several disruptions are already physically locked in on timelines that no political solution can shorten.
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Singapore’s four structural pillars under direct threat
Singapore’s exposure is not simply a matter of higher prices feeding through to household budgets. The disruption strikes at four structural pillars employing more than 120,000 people directly.
Bunkering: Singapore is the world’s largest bunkering port, selling a record 56.2 million metric tonnes of marine fuel in 2025 (estimated to account for 20% of total global bunker demand). Very low sulphur fuel oil prices have surged to US$1,052 per metric tonne, a premium of US$297 per tonne over Rotterdam’s US$755, and above the 2008 and 2022 peaks. A China-based trader told Reuters: “Some ships are unable to be refuelled at the Singapore port due to soaring oil prices.” AP Møller-Maersk CEO Vincent Clerc named Singapore as one of two ports globally where fuel oil supplies are “very low” and vessels risk running dry. Vessels at Singapore’s anchorage had risen 54% in a single week.
The Singapore-Rotterdam price gap has a structural consequence beyond cost: ships on European and Atlantic routes are now loading fuel in Rotterdam at the start of voyages, avoiding Singapore entirely, while vessels rerouting around the Cape of Good Hope bypass Singapore as a waypoint altogether. Singapore’s Asian bunkering market remains captive, but trans-oceanic and Middle East-routed traffic is under direct displacement pressure.
Refining, petrochemicals and liquefied natural gas (LNG): Jurong Island hosts more than 100 international energy and chemicals companies, employing 27,000 people, attracting over S$50 billion in investment, contributing approximately 3% of Singapore’s GDP and 20% of total manufacturing output. Singapore sources more than 70% of its crude oil from the Middle East.
By March 10, Singapore Refining Company had cut output to approximately 60% of capacity and ExxonMobil to approximately 50%, confirming operational reductions. Singapore relies on natural gas for approximately 95% of its electricity generation. Approximately 45 to 50% of its LNG supply in 2024 came from Qatar’s Ras Laffan — now shut — forcing Singapore to source replacement volumes on a spot market where LNG prices are trading at approximately four times pre-conflict levels. A further 35% to 40% of Singapore’s total gas arrives via pipeline from Malaysia and Indonesia, from their own domestic fields, and is unaffected by the Hormuz closure. The consequence for SP Group’s next quarterly tariff review is structurally predictable, even if the precise magnitude has not yet been publicly quantified.
Semiconductor manufacturing: The sector contributes approximately 7% of GDP, employs more than 35,000 people directly, and represents 16.6% of Singapore’s exports to the US. It was the engine of Singapore’s 15% manufacturing surge in 4Q2025. The Ras Laffan shutdown has started a helium countdown clock: distributor stocks will be exhausted by Days 35 to 45, extending the supply chain impact into 3Q2026 regardless of any political resolution.
Aviation: Aviation contributes approximately 5% of GDP, directly employs more than 60,000 people and supports approximately 200,000 jobs in total. Singapore Airlines (SIA) hedges approximately 49% of its total fuel exposure for FY2025/2026 at approximately US$86 per barrel, declining to approximately 7% by FY2027/2028. About 51% of SIA’s current fuel costs are therefore exposed to spot prices now above US$208 per barrel, roughly 2.4 times the hedged rate. As hedge coverage declines toward 7% over the next 18 months, spot exposure grows materially. SIA and Scoot have confirmed that they currently impose no fuel surcharges, but sustaining that position becomes progressively more difficult as the unhedged cost base rises.
The SGD and the bifurcated market
The Iran shock has an implication most commentators have not addressed: its effect on monetary policy and the divergence within Singapore’s own equity market.
When imported inflation rises, the standard response of the Monetary Authority of Singapore (MAS) is to allow the Singapore dollar (SGD) to appreciate by tightening its S$NEER policy band — reducing the SGD of imports and dampening inflation. MAS maintained its existing appreciation path at its January meeting. Analysts have since called for MAS to tighten further at its April review, with core inflation now forecast at 1.8% in 2H2026, and market consensus confirming the energy shock reinforces the case for SGD appreciation. Independent estimates suggest that crude oil sustained at US$92 per barrel could raise Singapore’s headline CPI from approximately 1.3% to 1.8%. Brent is trading around US$110 as of March 23.
SGD appreciation benefits consumers and domestically-earning companies. It directly disadvantages Singapore-listed companies with significant overseas revenues. For companies with material operations in transport, telecommunications, real estate, industrial services and agribusiness across Asia, rising operational costs and shrinking repatriated earnings in SGD terms create a compound double headwind.
This dynamic explains a paradox within Singapore’s equity market. The STI fell 2.1% on the initial shock day, March 3. By March 16, it had recovered, rising 0.6%, led by the three banks and the Singapore Exchange, while on the same day, the iEdge Singapore Next 50 fell 0.5%, led by a property developer, which declined sharply. The STI’s apparent resilience reflects a flight to quality toward Singapore’s three banks, which benefit from delayed rate cuts preserving net interest margins (NIM), safe-haven capital inflows, and NIM stabilisation if global rates stay elevated. DBS Group Holdings, Oversea-Chinese Banking Corp (OCBC) and UOB entered the crisis with non-performing loan (NPL) ratios of 1.0%, 0.9% and 1.5% respectively, which are currently contained but flagged by analysts as potentially rising if economic stress deepens. In a stagflationary environment, the banks are simultaneously the index’s most exposed sector to credit deterioration and their largest beneficiary of safe-haven capital flows. The STI may hold or even rise as the Singapore real economy contracts. This is the safe-haven paradox made visible.
The Asia multiplier and the cost cascade
Singapore’s 322% trade-to-GDP ratio is an amplification mechanism. In 2024, 84% of the oil and 83% of the LNG shipped through the Strait of Hormuz were bound for Asian markets. Japan sources 95% of its oil from the Middle East; South Korea, approximately 70%; and China, approximately 50%. Refinery margins across China, India, Japan and Thailand have already collapsed, with processing cuts of 5% to 15%. China and Hong Kong together account for approximately 25% of Singapore’s total exports. Asean economies are equally exposed, with several neighbours carrying fewer than 25 days of emergency supply cover. When Singapore’s customers across Asia face higher energy costs, output cuts and softening demand, they buy less from Singapore. If oil prices remain at current levels for two months, independent modelling suggests many parts of the world face recession.
The domestic cost cascade is already underway. MAS’s own research established that commodity price shocks accounted for over two-thirds of Singapore’s core inflation at the peak of the 2022 cycle, and that indirect transmission channels are “a more important propagator of commodity price shocks to inflation in Singapore relative to other economies”. MAS has already revised its 2026 inflation forecast upward to 1%–2%.
There is an additional second-order risk specific to Singapore. The conflict has already prompted enquiries from family offices relocating assets and families from the Middle East. A new wave of high-net-worth relocations would add fresh demand to Singapore’s private property and premium services markets at precisely the moment the broader cost of living is rising from energy and food inflation. For the majority of Singaporean households who own their HDB flats, the direct property channel is secondary; the more pressing concern is the cost-of-living squeeze from rising utilities, groceries and healthcare costs — a squeeze that falls disproportionately on lower-income households with the least financial buffer, into a cost base that is already structurally higher than pre-Covid levels.
What Singapore companies must do: resilience as strategy
The defining characteristic of this crisis is a dual shock — costs and revenues moving adversely and simultaneously. Boards that act with clarity and speed now will separate resilient organisations from vulnerable ones.
In the immediate term (within 30 days), the priority is clarity. Boards must commission a granular assessment of first-, second- and third-order exposures across the entire value chain: where Middle Eastern materials, feedstocks and supply routes enter the business, directly and indirectly. A retailer must map naphtha-derived plastics in its packaging and goods supply chain. A bank must scrutinise its loan book for commodity-sensitive corporate exposures and assess the adequacy of provisions against a rising NPL environment. For every company with material overseas revenues, the currency-translation impact of SGD appreciation must be modelled alongside the commodity-cost shock. Boards should simultaneously stress-test financial resilience against input costs 30% to 50% above 2025 baselines sustained for 12 months, with revenues compressing as regional trade volumes slow materially. These are not pessimistic assumptions — they are what the data now supports.
In the medium term (30 to 90 days), the priority is restructuring and scenario-managed diversification. Singapore’s 27 free-trade agreements (FTAs) are active procurement tools, not compliance frameworks. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) opens up Pacific Basin energy and commodity alternatives; the EU-Singapore FTA provides access to European speciality chemicals and industrial materials. Companies dependent on helium must initiate dual-sourcing immediately, bearing in mind that even maximum-effort diversification can replace only about one quarter of Qatar’s lost supply. The physical shortfall is a hard constraint that procurement alone cannot bridge. Boards should also model explicitly what the business would look like if regional trade volumes contract by 10% to 20% over 12 months, and assess whether currency hedging strategies are adequate for the likely SGD appreciation path.
Beyond 90 days, the structural imperative is to rebuild the resilience that optimised efficiency stripped away. Supply chains built for financial efficiency have no mechanism to absorb a simultaneous multi-commodity disruption at a single geographic chokepoint. Naphtha supply chains had approximately 14 days of transit buffer, not 90. The correct response is not strategic stockpiling of everything, but the deliberate identification of genuinely non-substitutable inputs: helium, specific crude grades, pharmaceutical feedstocks and critical packaging materials that justify maintained inventory buffers, and the distinction of these from inputs manageable through market flexibility. Companies that capitalise on this distinction in their supply chain architecture will emerge with a durable competitive advantage. Those that treat resilience as a cost will discover, in the next crisis, that they have learned nothing from this one.
Who will survive the winter
Singapore’s structural strengths are real and must be acknowledged. Six decades of political neutrality, no adversaries, an absence from every axis of regional conflict, and a governance reputation that spans every major global bloc have made it a genuine safe haven. The Economist Intelligence Unit ranks it second globally for city safety with a score of 91.5. Its AAA sovereign credit rating, 27 free trade agreements, managed exchange rate and newly activated Economic Resilience Taskforce give it institutional capacity that most regional economies cannot match. The enquiries from Middle Eastern family offices already relocating assets and families to Singapore, the safe-haven premium building in the STI, and the SGD’s appreciation all confirm that this premium is real and is being actively priced.
But sovereign resilience and corporate resilience are not the same thing, and they do not move together. Singapore’s strengths will protect the city-state. They will not protect the company that waits. The dual shock costs rising, revenues contracting, monetary policy constrained between inflation and recession, is already in motion. The damage peak has not yet arrived. The companies that emerge from this winter with their competitive positions intact will not be those that relied on Singapore’s strengths to carry them. They will be the ones who understood, early enough, that waiting was itself a choice — and chose not to wait.
Lee Ooi Keong is an independent director of an SGX Mainboard-listed company with 30 years of experience in corporate performance, investments and risk management. He is the managing director of Clover Point Consultants, an independent board and C-suite advisory firm, and was formerly director of risk management at Temasek for over 16 years
