Singapore seen as safe haven amidst LNG cost pressures

LNG imports hold 25% to 30% of the city-state's energy needs.

Singapore attracts safe-haven capital inflows despite market volatility, as liquefied natural gas (LNG) costs pose a risk to medium-term inflation, with imports accounting for 25% to 30% of the city-state’s energy needs, according to a UOB Kay Hian report.

Capital flows from the Middle East increased during the previous two weeks. Short-term energy supplies remain secure through pipeline gas imports from Indonesia, as these prices are linked to the Indonesian Crude Price with a time lag.

Supply sources also include the United States and Australia. Whilst supply disruptions remain improbable, elevated LNG prices present a threat to inflation forecasts.

This economic outlook follows a 2.0% decline in the Straits Times Index, as market pressure stems from tensions in the Middle East and weak employment data from the United States.

The report noted that oil prices remain at high levels.

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