Middle East conflicts may lead to a rise in global energy prices in the short term, potentially causing higher costs for businesses and consumers, depending on how long the conflict lasts.
According to a report by Lianhe Zaobao, Singapore Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong pointed out during the Committee of Supply debate on the Ministry of Trade and Industry’s budget on the 2nd that, apart from tariffs, geopolitical conflicts also have a significant impact on small open economies like Singapore.
He mentioned that over the past weekend, with the escalation of regional conflicts in the Middle East, the US and Israel launching attacks on Iran, and Iran retaliating against Israeli and US bases in the region, these events have led to the closure of the Strait of Hormuz, a key shipping route for crude oil and liquefied natural gas.
Gan Kim Yong said: “In the short term, this may lead to an increase in global energy prices. Rising energy prices may push up costs for businesses and consumers, and put pressure on both the global and Singapore economies, depending on the duration of the conflict. We are closely monitoring developments and will reassess economic forecasts as necessary.”