- Singapore’s economy is confronting the Middle East uncertainty from a relatively strong position.
- It is exposed to the energy shock due to its status as a price taker and its high import dependency…
- …although risks are partly mitigated by diversified supply.
- Direct goods exports exposure to the Middle East is limited.
- Oil staying at ~USD100/bbl would likely lift inflation more than they would depress economic growth.
Related insights
Click here to read the full report.
Geopolitical risks have intensified significantly in March amid the ongoing escalation of Middle East tensions sparked by US-Israeli military strikes on Iran. Global oil and gas prices have surged on the back of the Iran-centred conflict, which is already disrupting energy shipments through the Straits of Hormuz - the world’s most critical energy chokepoint, with ~20% of global oil and gas flows transiting through it.
Singapore will be negatively impacted from the wider Middle East disruption. We assess the impact to be felt more through the inflation channel, given Singapore’s position as a price taker that is highly dependent on energy imports. Nonetheless, the economy is confronting this uncertainty from a relatively strong position, amid solid growth momentum buoyed by global artificial intelligence-related tailwinds, still-low inflation, healthy external metrics, and ample policy space in early 2026.
Energy supply and trade exposure
Singapore is exposed to the current global energy shock due to its high import dependency, although risks are partly mitigated by diversified supply. It relies heavily on natural gas for electricity generation, accounting for >90% of the energy mix, with costs tied to oil prices by commercial contracts. Singapore’s liquified natural gas (LNG) import mix is well distributed. Although Qatar accounted for ~25% share in volume terms as of 2024 (with some news sources citing >40% share in 2025), other key supply sources included Australia, Mozambique, and the US. Pipeline natural gas supplies from Indonesia and Malaysia, which together accounted for 43% of overall natural gas imports in 2025, provide an additional buffer. Singapore’s direct goods exports exposure to the Middle East is limited, accounting for ~1.5% of the total in 2025. This suggests that a demand shock in the Middle East is unlikely to place significant downside pressure on exports.
Macroeconomic and policy implications
The global energy price shock in an event of a protracted Middle East conflict would likely raise Singapore’s inflation more than it would depress economic growth, in our view. If Brent crude oil price remains at around USD100/bbl for the rest of the year, we estimate that Singapore’s headline inflation could rise by around 1.5 percentage points (pp), while real GDP growth could be lowered by 0.4 pp (see ‘Macro Insights Weekly: Asia’s vulnerability to the Iran crisis’ for additional analysis for other Asian economies). Singapore has ample policy space to tackle the external shock from Middle East geopolitical uncertainty.
Click here to read the full report.
Topic
Explore more
E & S FocusGENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates & Digital Assets)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.