MUFG’s Senior Currency Analyst Lloyd Chan argues Singapore’s energy system and fiscal strength materially limit near‑term tail risks from Middle East tensions. The city‑state benefits from deep infrastructure, diversified sourcing, large inventories and untapped fuel reserves, plus the ability to switch fuels and expand reserves. Strong public finances allow further stockpiling and targeted support if disruptions through Strait of Hormuz persist.

Infrastructure and fiscal space support resilience

"Singapore’s energy resilience materially limits tail risks in the near term. The city-state enters this shock with well-established buffers. Deep energy infrastructure, diversified energy sourcing, and strong logistical capacity significantly reduce vulnerability to near-term supply disruptions. Fuel reserves remain untapped, and no rationing measures have been introduced so far."

"As a global bunkering hub, Singapore holds large inventories and storage capacity, underpinning resilience against temporary supply shocks."

"While natural gas accounts for ~95% of electricity generation and Qatari supplies face stress, mitigation options are substantial. Singapore imports LNG from Australia and the US, retains ability to switch to diesel for electricity generation, and holds strategic fuel reserves owned by the government and power generators."

"That said, vulnerabilities would rise if disruptions to energy flows through the Strait of Hormuz prove prolonged, reinforcing policymakers’ view that fuel reserves will need to be further expanded."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)