S'pore on inflation alert over risk of oil and gas price surge

The Republic may face an inflationary bump with energy prices set to spike following US and Israeli air strikes on Iran on Feb 28, bringing oil and gas shipments from the Persian Gulf to a halt.

- Ovais Subhani

Brent crude, a major global benchmark for oil prices, could jump by up to US$20 a barrel when trading resumes on March 2, асcording to Mr Jorge Leon of Rystad Energy.

Brent closed at US$72.87 a barrel on Feb 27, up 2.8 per cent, amid fears of imminent war in the Persian Gulf, which supplies about 30 per cent of global seaborne crude and 20 per cent of liquefied natural gas (LNG).

Geopolitical jitters have already pushed the benchmark up by about 17 per cent since the start of the year, defying a glut of supplies amid higher production from members of the Organisation of the Petroleum Exporting Countries and their allies together known as OPEC+.

For Singapore car owners, more expensive crude will mean higher prices at petrol pumps. Higher LNG prices will have an even wider impact, as Singapore produces the bulk of its electricity from natural gas.

While gas is pumped into Singapore mainly through pipelines from neighbouring countries, LNG has seen an increasing share in the mix, especially after the Republic made a long-term supply deal with Qatar - the Gulf state ranked as the world’s top LNG exporter.

Experts say that the impact on petrol and electricity prices and overall inflation in Singapore will be felt only if the conflict extends beyond a week or two.