Singapore’s energy sector is currently grappling with significant instability stemming from the ongoing Middle East conflict. Traders, lawyers, and analysts are operating in crisis management mode, facing extreme price fluctuations, disruptions in cargo shipments, and complex legal questions. Baldev Bhinder, managing director at Blackstone & Gold, a disputes law firm specializing in commodities and trade, described the situation as a "perfect storm of disruption across the trading chain." Professionals are forced to make quick judgments despite a lack of complete information, all while navigating an increasingly volatile environment.
The broader Asian market is also feeling the impact, with refiners in India and China, the world's largest oil importers, aggressively purchasing Middle Eastern crude. This increased demand is driving up prices, with benchmark Dubai futures climbing to nearly $100 a barrel, marking the highest point since May. Physical premiums for Oman and Murban crude have also surged due to concerns over supply disruptions from Iran and its proxies, such as Yemen’s Houthis, following a flare-up in US-Iran hostilities.
Singapore has already unveiled approximately S$1 billion ($778 million) in support measures to buffer its economy, warning of potential power disruptions as the Middle East conflict constricts energy supplies. This package includes an increase in the corporate income tax rebate to 50% from 40% and a S$200 increase in cost-of-living payments for eligible Singaporeans. Food and grocery vouchers are being distributed earlier, and cab drivers are receiving S$200 to offset rising fuel costs.
The war has significantly impacted Singapore's oil product stocks, which hit their lowest in over nine months in early May 2026. Combined onshore oil product stocks totaled 44.83 million barrels, the lowest since late July 2025, according to government data. This reduction is attributed to curtailed Middle East crude and fuel exports. Light and middle distillate stocks, including petrol, diesel, and jet fuel, have declined, with residual fuel inventories hovering near a one-year low. This shortage has prompted Singapore to import gasoil from unusual sources like Egypt, in addition to India and Oman, as elevated Asian premiums attract barrels from outside the region.
Conversely, a potential global oil supply glut loomed in September 2025, driven by OPEC+ decisions to increase output. The group had abandoned its previous strategy of propping up prices, opting to regain market dominance through production increases, agreeing to a modest 137,000 barrels a day increase in September 2025. This decision was expected to cast a shadow over industry gatherings in Singapore, with discussions likely dominated by the imminent supply surplus. However, the current situation, as of late 2026, seems to be focused more on supply disruptions and increased prices due to geopolitical tensions rather than a surplus.
