A narrow strait off Iran, but rising recession risk in Singapore
The ongoing Iran war has disrupted global oil and gas supplies, driving energy prices higher and injecting volatility into equities. Singapore, as a small and open economy, is expected to take steps to shield itself from the shocks, with households already facing higher electricity and gas tariffs.
The Iran war has disrupted global oil and gas supplies, driving energy prices higher. Roughly a fifth of global oil and gas transits the Strait of Hormuz, a narrow passage off Iran. The disruption has already driven energy prices sharply higher, injecting volatility into equities and pushing bond yields upward. In Singapore, households will pay higher electricity and gas tariffs in the second quarter of 2026. The country's economy is expected to take a hit, with growth potentially slowing down due to higher production costs and eroded household purchasing power. Central banks are in a bind, with easing monetary policy potentially entrenching inflation and policy tightening worsening the slowdown.
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