Oil surge puts Singapore on alert as Strait of Hormuz risk grows

[SINGAPORE] Oil’s latest rally may have little immediate impact on Singapore, but analysts warn that an escalation in Middle East tensions – particularly a blockade of the highly strategic Strait of Hormuz – could send prices of the commodity soaring past US$100 a barrel, dealing a blow to global growth and the city-state’s open economy.

Bank of Singapore commodity strategist Sim Moh Siong said the real risk lies in how long prices stay elevated, noting that a protracted spike above US$100 could pose a major drag on economic momentum in Singapore and globally. 

“The duration and the magnitude of the oil price rise matter,” said Sim, adding that the potential inflation or global economic growth impact from the current oil price upside of about US$5 per barrel is still “quite manageable”.