Inflation rises as Middle East tensions push brent crude higher

A 10% rise in Brent could lift Singapore’s headline CPI by about 0.15 percentage points.

Inflation in Singapore is showing upward pressure as rising Brent crude prices, fueled by geopolitical tensions in the Middle East, drive up energy costs, according to RHB.

A 10% increase in Brent is estimated to raise the city-state’s headline Consumer Price Index (CPI) by about 0.15 percentage points.

Singapore’s economy, heavily reliant on imported energy, is particularly sensitive to such shocks, the report said.

Around 95% of electricity in the country is generated from natural gas, of which roughly 57% is imported as liquefied natural gas (LNG), including supplies linked to the Middle East.

“As global gas prices rise amid geopolitical tensions, the cost of generating electricity in Singapore increases,” RHB said.

Despite these risks, Singapore’s energy supply remains secure, said Minister for Manpower Tan See Leng.

Half of the country’s gas comes from piped supplies, and imports from Australia and the US reduce reliance on the Middle East. Fuel stockpiles and the option for power plants to switch to diesel further ensure stability.

Higher global energy prices are also expected to raise electricity costs. To help households, U-Save rebates will increase to up to $570 this year, Tan noted.

The government said it is monitoring the situation and continuing to diversify energy sources to strengthen supply security.

RHB said that, in the short term, the immediate impact may be limited, as many consumers are shielded by fixed-price electricity contracts or the quarterly-adjusted SP Group tariff.

Still, prolonged energy price increases could further push up utilities and transportation costs.

“The Middle East conflict affects Singapore’s electricity tariffs mainly through rising global natural gas prices, as the power sector relies heavily on imported gas,” the report said.

It also noted that significant portion of Singapore’s crude oil imports originates from the Middle East, particularly the United Arab Emirates, Qatar, and Saudi Arabia, which together account for around 70% of supply.

Brent crude prices surged in early March 2026 following tensions that disrupted shipping lanes and tightened supply, pushing local pump prices higher.

Higher transportation costs contribute to broader inflationary pressures, magnified by Singapore’s near-total reliance on imported fuel.

Authorities are reviewing inflation and GDP forecasts in light of higher energy costs affecting businesses and households.

The Monetary Authority of Singapore (MAS) has indicated that policy adjustments could be considered if needed, while foreign exchange and money markets remain stable.

Previously, Singapore projected GDP growth of up to 4% in 2026, supported by global economic strength.