Brent crude could jump US$20 as Hormuz disruption threatens energy flows

Singapore could face renewed inflationary pressure as geopolitical tensions in the Persian Gulf threaten global oil and gas supplies, sending energy markets into turmoil.

Oil Markets React to Gulf Escalation
Brent crude could jump by as much as US$20 per barrel when trading resumes on March 2, according to Jorge Leon of Rystad Energy. The benchmark closed at US$72.87 on Feb 27, already up 2.8 percent amid fears of conflict after US and Israeli air strikes on Iran on Feb 28.

The Persian Gulf supplies around 30 percent of global sea-borne crude and 20 percent of liquefied natural gas. Brent has climbed about 17 percent since the start of the year despite ample supply from OPEC+ producers.

Strait of Hormuz Disruption
The immediate concern is the effective halt of traffic through the Strait of Hormuz, a narrow passage linking the Gulf to the Indian Ocean. Around 15 million barrels of crude oil and 290 million cubic metres of LNG pass through the strait daily.

Even without a formal closure, shipping lines are avoiding the area and insurers are raising premiums or withdrawing coverage. Analysts warn that tanker congestion and port delays could take weeks to normalise, keeping prices elevated.

Implications for Singapore
For Singapore motorists, higher crude prices would translate into costlier petrol. More significantly, rising LNG prices could affect electricity tariffs, as natural gas generates most of the Republic’s power supply.

Although Singapore receives gas mainly via pipelines from neighbouring countries, LNG has become a growing share of the mix, especially after securing long-term supply from Qatar. Experts say inflationary impact will intensify if disruptions last beyond one or two weeks.

OPEC+ and Supply Alternatives
OPEC+, which includes Saudi Arabia, the United Arab Emirates and Russia, could announce production increases to stabilise prices. However, analysts caution that additional output may not ease pressure if crude cannot exit the Gulf due to security risks.

Alternative export routes, such as Saudi Red Sea ports, and strategic petroleum reserves in major consuming nations like China may offer temporary relief. Still, an effective loss of 8 million to 10 million barrels per day could keep benchmark prices high.

Inflation Outlook and Economic Risks
Economists have already warned that inflation in 2026 may be underestimated. Factors such as higher semiconductor prices and the end of deflation in China are pushing up global manufacturing costs.

The Monetary Authority of Singapore expects core and headline inflation to average between 1 percent and 2 percent in 2026. However, it acknowledged that geopolitical supply shocks, including energy disruptions, add uncertainty to the outlook.

Rising tensions in the Persian Gulf highlight Singapore’s vulnerability to global energy shocks. While temporary buffers may cushion the blow, prolonged disruption could fuel higher petrol and electricity prices, adding to broader inflation risks. Policymakers and businesses will be watching closely as energy markets respond in the days ahead.

Sources: Straits Times (2026)

Keywords: Brent Crude Surge, Hormuz Shipping Halt, LNG Price Spike, OPEC Plus Production, Singapore Electricity Costs