Buckle Up. We might be in for a ride.
The Philippines has declared a national energy emergency. If Hormuz stays closed for much longer, our neighbouring nations and many of the most economically vulnerable people in the world will feel more than just a pinch.
Because we have the geopolitical holy-trinity of money, friends and reputation, Singapore will not grapple with this crisis as existential. Between Tan See Leng requesting that Singaporeans use less air-con and adopt domestic solar infrastructure, and President Tharman giving us a micro-lecture in the changing world order, as a nation, we could be doing worse.
Our system is deeper, our reserves larger, our infrastructure more resilient. But we will not go unscathed. The same shock currently moving through Manila is already moving through us. Haven’t you seen your petrol bill?
Singapore will not run out of power, but we will have to pay more to keep the lights on. If we’re lucky, PM Wong might pull a welcome rabbit out of his hat with a cost dampener of sorts.
Geography Is Not a Shield
Many Singaporeans think of the Middle East is a distant theater of tragedy. Emotionally felt perhaps, but not much more. The reality, however, is that it is a direct economic lifeline. When the Strait of Hormuz tightens, our cost of living expands.
Singapore imports 100% of its primary energy. Between 52%-70% of our crude oil comes from the Middle East. Natural gas powers roughly 95% of our grid and about 30% of our LNG supply comes from Qatar.
The Hormuz Chokepoint
The Strait of Hormuz is the world’s most sensitive energy valve. Any disruption is felt in Jurong Island within hours.
Foreign Minister Vivian Balakrishnan was direct about what a sustained disruption would mean:
“If you get tit-for-tat destruction of energy infrastructure… you’re dealing not only with an immediate blockage but a prolonged period in which exports will be diminished.”
Vivian Balakrishnan
There is subtext here. It’s a trusted maxim that what goes up will come down. Well, turns out, that may not always be true. That distinction, between a mere temporary spike and a prolonged new floor, is the one that matters.
Our markets can absorb a spike, but the difficult truth is that they might reprice around a floor.
The Economic Domino Topple
The energy shock will arrive in stages, each one lagging the last.
Within days, oil and refined fuel prices move. Singapore, as the world’s largest bunkering hub, has already felt this at the pump.
Within weeks, electricity tariffs begin to follow. Our power is gas-fired. The bills that reach households and firms reflect a rolling average of global gas prices — the lag is one to three months.
Also within one to two months, logistics costs rise. Bunker fuel is a dominant input for global shipping. Because Singapore sits at the center of global trade flows, higher freight rates will hit us too.
The final stage, food, takes three to six months to fully arrive. Think Ukraine 2.0. This is the one that stays longest. Fertilisers are gas-derived. When energy costs stay elevated, agricultural costs across Southeast Asia rise with them.
It’s the small things. The petrol bill, the electricity statement, the supermarket shelf. Each one manageable on its own. But together, they reshape household budgets and add systemic stress.
We have seen this sequence before, by the way. The 1973 oil crisis followed the same path: energy, then transport, then food, then inflation that would not shift. Singapore saw prices rise close to 30% in that period.
The global situation today is worse than back in ’73. The difference today is speed. The global system is more interconnected. Transmission is faster. The volumes at risk are larger.
“Stickiness“
The deeper concern is not the shock itself. It is the “stickiness” that follows.
Minister Balakrishnan framed it precisely:
“The second order impact is an increase in inflation… and the worry beyond that is that these things tend to become sticky.”
Once costs embed across sectors, they are difficult to reverse. Wages adjust upward. Expectations shift. Businesses reprice permanently. A shock becomes a condition.
If the conflict is prolonged, the energy shock is not a spike. It is a plateau. Prices reset at a higher level and remain there.
President Tharman has framed the broader picture: “We have to brace ourselves for a longer storm of global political instability.” Prime Minister Lawrence Wong has been equally direct about the world we are entering — more volatile, more unpredictable, more willing to use force as an instrument of statecraft.
What This Means for Singaporeans
It’s not all doom and gloom.
The good news is that Singapore has real buffers: diversified LNG sources, regional gas pipelines, strategic stockpiles, fuel-switching capability. These systems are designed to prevent catastrophic system failure.
But they are not designed to shield us from price fluctuations.
We are a price-taker in global energy markets. We don’t set prices. we pay them. Pay And Pay. (Sorry, I couldn’t resist.)
And like PM Lawrence’s magical, hypothetical rabbits… The price controls we could see are ultimately a mirage. They just shift the debt from the citizen’s wallet to the national reserves. The lights stay on; the balance sheet weakens a little, but that’s what the reserves are there for. Thank you ah-gong.
So set your expectations right and prepare yourselves if you’re already in a tough spot.
The Philippines’ emergency declaration is an early warning signal.
The lights will stay on. The ships will keep docking. But we cannot insulate ourselves from the price of being connected to the world.
Minister Balakrishnan identified the only questions that matter now: how high, how long, and most interestingly, what are the secondary scarring effects.
What might these be?
Well not to be over-dramatic, but the deeper shift is likely to be psycho-social.
For a society built on the promise of stability, the trade of certain freedoms for predictable security, persistent volatility is its own kind of stress. Anxiety rises. Caution sets in. Frustration too. The economy absorbs the shock, but the social weight of it is felt differently. A manifestation of this may very well be renewed attempts at revisiting the social contract with the party. They are likely fully aware of this.
Will our social compact, and the social contract, absorb a potential re-flooring of the cost of living?
