Singapore consumers in for higher petrol, electricity prices as oil spikes past US$100

Oil prices shot up as high as US$111 a barrel in trading on March 9, up 20 per cent. Read more at straitstimes.com.

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SINGAPORE - A dangerous new escalation in the Middle East conflict now drawing in the region’s oil infrastructure makes it likely that consumers and businesses in Singapore will soon see petrol prices rise again after a round of hikes last week.

Electricity prices, which depend heavily on natural gas, may also go up if Middle East supplies remain disrupted for longer.

The expanding conflict is now seeing oil and LNG facilities in Bharain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates targetted in attacks by Iran while Israel has struck critical oil facilities in Tehran.

While the closure of the Strait of Hormuz has already disrupted the transport of oil, it would be quick to reverse once reopened. But the damage to the region’s oil infrastructure means it would take much longer for production and exports to resume even after the missile and drone strikes stop.

Global benchmark Brent crude shot up as high as US$111 a barrel in early trading on March 9, up 20 per cent from its close on Friday (March 6). This is the highest level Brent has reached since July 2022 when oil surged after Russia’s invasion of Ukraine.Analysts said the oil production cuts were expected as most producers in the region were signalling that they were running out of capacity to store the unshipped output.The United Arab Emirates’ Abu Dhabi National Oil Company (ADNOC) said on March 7 that it has “activated its well-established protocols and is working closely with the relevant authorities to protect its people, assets, and operations.”Kuwait Petroleum Corp. said it was lowering production at both its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.”Bloomberg News reported on March 8 that Iraq’s oil production has declined by roughly 60 per cent.There is also a continued physical threat to tankers plying in the Persian Gulf.Since the start of hostilities on Feb 28, Britain’s maritime security agency UKMTO has issued around 10 alerts for attacks on vessels in Hormuz - a narrow waterway connecting the Persian Gulf to the Indian Ocean that handles a fifth of the world’s oil and large volumes of LNG.The International Maritime Organisation (IMO) listed on its website on March 6 a total of nine attacks on ships in the strait in one week, including four incidents that killed a total of seven people.The Strait of Hormuz is just 24 miles wide at its narrowest point and traces the coastline of Iran which is facing a joint air campaign by the United States and Israel. Iran on its part has retaliated with missile and drone attacks on Israel and Arab states across the Middle East that host American military facilities.The oil production cuts come on top of the force majeure declared by Qatar, one of the world’s top LNG exporters and a key supplier for Singapore, after a strike last week on its Ras Laffan plant - which cools and compresses natural gas into liquid that can be shipped.Some 15 million barrels of crude oil and 290 million cubic m of LNG pass through Hormuz each day from the Middle East to mainly Asia and Europe.Analysts said oil supplies from the Middle East - which accounts for roughly 40 per cent of all global crude exports - may remain constrained or even dwindle further as tankers plying the region are running out of marine fuel which typically comes via Hormuz as well.But for petrol and diesel prices in Singapore and the rest of Asia the more immediate impact is coming from China - the region’s third-biggest gasoline supplier - which on March 5 told the country’s top refiners to temporarily suspend exports immediately, with some exceptions.Petrol prices in Singapore are fixed by retailers daily, taking the Mean of Platts Singapore (MOPS) average of daily price assessments published by S&P Global Platts.