Executive Summary

Russia’s intensified attacks on Ukraine’s energy infrastructure in January 2026, particularly the massive strikes on Kyiv that left thousands without power and heat in subzero temperatures, represent a dangerous escalation in the nearly four-year conflict. While Singapore’s direct economic ties to both Russia and Ukraine remain limited, the ripple effects through global energy markets, supply chains, and geopolitical stability pose significant challenges for the city-state’s economy and strategic position in 2026.

The January 2026 Attacks: Scale and Severity

On January 9, 2026, Russia launched one of its most devastating attacks since the war began, deploying 242 drones and multiple missiles against Kyiv and other Ukrainian cities. The assault killed at least four people and injured approximately 25 others. The attack disrupted power and water supplies across the capital, leaving nearly 6,000 apartment buildings without heat and disconnecting about 417,000 households from electricity during temperatures that plummeted to -19°C (-2.2°F).

A follow-up attack on January 13 saw Russia launch nearly 300 drones and 18 missiles, marking the largest assault of 2026 to date. These strikes targeted thermal power plants on both sides of the Dnipro River and damaged critical infrastructure facilities. By mid-January 2026, approximately 70 percent of Ukraine’s energy infrastructure had been hit this winter, creating what Kyiv Mayor Vitali Klitschko described as an “unprecedented” crisis.

The humanitarian toll has been severe. Ukrainian President Volodymyr Zelenskyy declared a state of emergency for the country’s energy sector on January 15, 2026. Hundreds of thousands remain without essential heating during the coldest winter in 20 years, with indoor temperatures in some Kyiv apartments dropping to 10°C (50°F), well below the World Health Organization’s recommended minimum of 18°C.

Singapore’s Direct Economic Exposure: Limited but Strategic

Trade Relations

Singapore’s direct trade with Russia and Ukraine remains modest but strategically significant. According to United Nations trade data, Singapore imported approximately US$3.58 billion from Russia in 2023, with refined petroleum products accounting for US$1.09 billion, representing the lion’s share of imports. By contrast, imports from Ukraine totaled just US$28.35 million during the same period.

Russia’s exports to Singapore account for only 0.1 percent of Singapore’s total exports and 0.8 percent of its total imports. However, this understates the broader impact, as Singapore functions as a critical transshipment hub where goods often pass through en route to other destinations throughout Asia.

Singapore’s Sanctions Position

In an unprecedented move, Singapore departed from its traditional policy of only implementing United Nations Security Council sanctions and imposed its own autonomous sanctions against Russia in March 2022. This marked the first time since 1978 that Singapore enacted unilateral sanctions, aligning itself with Western jurisdictions despite significant potential economic costs.

The sanctions package includes export controls on military goods and dual-use items (electronics, computers, and telecommunications equipment), financial restrictions targeting four Russian banks (VTB Bank, Vnesheconombank, Promsvyazbank, and Bank Rossiya), and prohibitions on fund-raising activities benefiting the Russian government. Russia subsequently placed Singapore on its list of “unfriendly countries,” requiring special government commission approval for all corporate deals with Singaporean entities.

Indirect Economic Impacts: The Real Challenge for Singapore

Energy Cost Pressures

Singapore’s economy faces significant vulnerabilities through indirect channels, particularly energy costs. As Trade and Industry Minister Gan Kim Yong warned in March 2022, Singapore will be “significantly impacted” by disruptions to global oil and gas supplies, as the country imports most of its energy needs.

Russia remains the world’s second-largest oil exporter after Saudi Arabia, shipping approximately five million barrels of crude oil daily. The intensified attacks on Ukrainian energy infrastructure in January 2026 have contributed to volatility in global energy markets, even as the direct impact on Russian energy exports has been limited by continued demand from China and India.

For Singapore households and businesses, elevated energy costs remain persistent. Inflation forecasts for 2026 project both core and headline inflation rising above 1 percent, compared to under 1 percent in 2025. This increase is attributed in part to higher carbon taxes, sustainable fuel levies, and ongoing energy market volatility linked to geopolitical tensions.

Most Singapore households experienced significant increases in electricity bills beginning in January 2022, with electricity tariffs rising more than 5 percent on the back of rising fuel prices. While inflation has moderated from its 2022-2024 peak, the prospect of sustained conflict and energy infrastructure attacks maintains upward pressure on utility costs.

Supply Chain Disruptions

The Russia-Ukraine conflict has compounded supply chain challenges that initially emerged during the COVID-19 pandemic. Western sanctions and Russian export restrictions have created bottlenecks affecting multiple sectors critical to Singapore’s economy.

Russia and Ukraine together account for over 25 percent of global wheat production and are major exporters of barley, maize, sunflower seeds, and key metals including nickel and palladium. Disruptions in these commodity markets raise costs for Singapore businesses that depend on agricultural products for food processing and metals for manufacturing and electronics.

Singapore’s pivotal role as a global shipping and logistics hub means that supply chain disruptions reverberate through its economy even when Singapore itself is not the final destination. Port congestion, rerouted shipping lanes, and increased insurance costs for vessels traversing conflict-adjacent waters all impose costs on Singapore-based logistics operators.

The semiconductor industry, vital to Singapore’s manufacturing sector, has faced particular challenges. Global chip inventory dynamics have been affected by the war, with some specialized gases and materials sourced from the conflict region experiencing supply constraints that could raise production costs.

Financial Services and Wealth Management

Singapore’s banking sector has navigated the sanctions regime while managing modest direct exposure to Russia. DBS Group Holdings, Oversea-Chinese Banking Corp., and United Overseas Bank all reported small exposures to Russian markets but flagged concerns about how market volatility stemming from the conflict dampened prospects for wealth management services.

Uncertainty in global financial markets, particularly affecting European clients and Asian investors with international portfolios, has reduced fee income from wealth management services. While Singapore’s banks remain profitable, geopolitical risk premiums and market volatility make it harder to deliver strong returns to clients seeking stable investment environments.

The Monetary Authority of Singapore’s sanctions implementation requires financial institutions to conduct enhanced due diligence to prevent sanctions evasion. This creates compliance costs and operational complexity, particularly given Singapore’s role as a transshipment hub where goods and payments may pass through multiple jurisdictions.

Broader Business Confidence and Investment

Business sentiment surveys conducted by the Singapore Commercial Credit Bureau showed Business Optimism Index dipping in Q2 2022 to +5.35 percent from +5.91 percent in the previous quarter, primarily due to geopolitical uncertainty from the Russia-Ukraine war exacerbating risks of global supply chain disruptions.

For businesses with exposure to Russia, the challenges extend beyond sanctions compliance to include operational difficulties such as processing payment transactions, managing contractual obligations, reduced access to foreign capital, and declining demand affecting revenue growth. Some Singapore companies have had to suspend partial or complete business operations related to Russian markets.

The Singapore Business Federation’s survey on the Ukraine-Russia conflict’s impact found that many businesses faced increased costs in raw materials, energy, and operational expenses, with some companies forced to absorb cost increases while operating with smaller margins rather than passing them fully to customers.

Geopolitical and Strategic Implications for Singapore

The Principle of Sovereignty

Singapore’s decision to impose sanctions reflects fundamental principles critical to the city-state’s survival. Foreign Minister Vivian Balakrishnan emphasized in his Parliamentary statement that “the sovereignty, political independence, and territorial integrity of all countries, big and small, must be respected.” For Singapore, a small nation dependent on international law and norms, Russia’s violation of Ukraine’s sovereignty represents a dangerous precedent.

The intensification of attacks on civilian infrastructure in January 2026, with Russia deliberately targeting energy systems during freezing winter conditions, underscores the humanitarian dimensions of the conflict. United Nations officials have condemned these attacks as violations of international humanitarian law, describing them as war crimes that disproportionately affect vulnerable populations including the elderly, children, and those with limited mobility.

Regional Security Dynamics

The Russia-Ukraine conflict has reshaped regional security calculations across Asia. Singapore’s position as the only ASEAN member to impose direct sanctions on Russia has differentiated it from neighbors who have maintained neutrality or closer ties with Moscow.

This creates complex diplomatic dynamics within ASEAN, where consensus-based decision-making traditionally prevails. Singapore’s autonomous action represents a departure that could influence future regional responses to international crises, though it also risks creating divisions within the regional bloc.

China’s response to the conflict and its continued economic engagement with Russia significantly affects Singapore’s strategic environment. As one of Singapore’s largest trading partners, China’s economic trajectory and policy choices regarding Russia have outsized implications for regional stability and Singapore’s economic prospects.

Global Economic Order and Trade Routes

Prime Minister Lawrence Wong warned in early 2025 that the global economy is becoming more fragmented, with trade routes being reconfigured and supply chains reshaped in the name of resilience and security. Geopolitical tensions from the war in Ukraine, instability in Gaza, and regional border disputes are no longer short-term disruptions but permanent features of the global economy.

For Singapore, whose trade-to-GDP ratio exceeds 320 percent, this fragmentation poses existential challenges. The Economic Strategy Review led by Deputy Prime Minister Gan Kim Yong is examining how Singapore must adapt its economic model to navigate this more fragmented world while maintaining openness and connectivity.

Inflation and Cost of Living Pressures in 2026

Current Inflation Trajectory

Singapore’s inflation outlook for 2026 reflects ongoing global uncertainties, including the Russia-Ukraine conflict. The Monetary Authority of Singapore forecasts headline inflation of 0.5-1.5 percent for 2026, compared to 0.5-1.0 percent in 2025. Core inflation, which excludes accommodation and private transport, is projected at 0.5-1.5 percent in 2026.

Maybank economists predict both core and headline inflation will likely exceed 1 percent in 2026, driven by upcoming increases in public transport fares, higher carbon taxes, and a new sustainable fuel levy on flight tickets. Services inflation remains the dominant source of price pressure, with labor-intensive sectors facing rising wage costs that are difficult to reverse.

Energy and Transportation Costs

The continued targeting of energy infrastructure in Ukraine contributes to global energy price volatility, even as direct impacts on global oil supplies remain moderated by Russian sales to non-sanctioning countries. Singapore’s heavy reliance on natural gas for power generation means that any sustained spike in global gas prices rapidly translates into higher electricity tariffs for households and businesses.

Health insurance costs rose 16.1 percent year-on-year in November 2025, while overall health care costs increased 4.4 percent. Transportation prices increased 3.4 percent in October 2025, reflecting both fuel costs and fare adjustments. These increases compound the burden on households still adjusting to elevated price levels following the 2022-2024 inflation surge.

Structural Cost Pressures

While Singapore has successfully moderated inflation from its 2022-2024 peaks, the overall price level remains far higher than before the pandemic and Ukraine conflict. Lower inflation means prices are rising more slowly, not that prices are falling. Households continue navigating elevated costs for housing, food, and healthcare.

Food inflation, though moderate at 0.8 percent in November 2025, remains susceptible to global commodity price shocks. As major wheat and grain exporters, disruptions in Russia and Ukraine affect global food prices with delayed impacts on Singapore’s import-dependent food market.

Sanctions Enforcement and Compliance Risks

Singapore as a Transshipment Hub

Singapore’s role as a global maritime and trading hub creates unique sanctions enforcement challenges. Reports have emerged of increased Russian fuel blending and re-exporting operations in Singapore, despite European Union and G7 sanctions on Russian oil products.

Oil storage firms and traders in the Singapore Strait have reported rising demand for storage facilities, with six-month lease costs for fuel oil or crude oil storage increasing 17-20 percent above the previous year. Ship-tracking data indicated that Singaporean oil-receiving terminals took in more than double the volume of Russian naphtha and fuel oil in late 2022 compared to earlier periods.

While Singapore imposed export controls on military and dual-use goods to Russia, the complexity of global supply chains means enforcement requires constant vigilance. Goods transiting through Singapore’s port network may have concealed origins or ultimate destinations, creating compliance challenges for both government regulators and private companies.

Corporate Compliance Costs

Singapore-listed companies with nexus to Russia or Ukraine have increased disclosure requirements under Singapore Exchange regulations. Compliance efforts include actively assessing the Russia-Ukraine war’s impact on their businesses, providing detailed breakdowns of cash flows related to sanctioned entities, and hiring external sanctions counsel to certify compliance with sanctions policies.

These compliance costs, while necessary, represent additional operational burdens for businesses already managing complex supply chains and multiple jurisdictional requirements. Enhanced due diligence, beneficial ownership verification, and screening measures are essential but resource-intensive activities.

Looking Ahead: Singapore’s Strategic Response

Economic Strategy Review

The Economic Strategy Review, with proposals expected to be formally addressed in Budget 2026 (scheduled for February 12, 2026), will shape Singapore’s response to a more fragmented global economy. Key areas under examination include job security, business support, clean energy transitions, and workforce adaptation.

Singapore’s aging population and declining birth rates require policies that better support young families while enabling seniors who want to continue working. A Tripartite Workgroup on Senior Employment is reviewing age-friendly workplace policies alongside efforts to strengthen retirement adequacy.

Energy Security and Diversification

One of Singapore’s most significant long-term challenges highlighted in the Economic Strategy Review is securing reliable, low-carbon energy sources. This includes importing green energy through the ASEAN power grid and exploring domestic options such as low-carbon hydrogen and nuclear energy.

The vulnerabilities exposed by energy price volatility stemming from the Russia-Ukraine conflict underscore the urgency of diversifying energy sources. Singapore’s heavy reliance on natural gas imports from a limited number of suppliers creates strategic vulnerabilities that require addressing through technological innovation and regional cooperation.

Balancing Principles and Pragmatism

Singapore’s foreign policy must continue balancing principled stands on international law with pragmatic engagement across a multipolar world. As Foreign Minister Balakrishnan noted, “It is all too easy for a small country to be caught up in the geopolitical games of big powers. Small countries must avoid becoming sacrificial pawns, vassal states or ‘cat’s paws’ to be used by one side against the other.”

This requires maintaining constructive relationships with major powers while defending core principles about sovereignty and territorial integrity. Singapore’s success depends on preserving a rules-based international order where small states can thrive despite lacking military or economic scale.

Support Measures for Households and Businesses

Finance Minister Lawrence Wong has indicated Singapore stands prepared to introduce additional support measures for households, workers, and businesses if the economic situation deteriorates further. While specifics await Budget 2026, potential measures could include:

• Targeted utility subsidies to offset energy cost increases
• Enhanced business support for sectors most affected by supply chain disruptions
• Workforce development programs to help workers transition to growth sectors
• Infrastructure investments to improve supply chain resilience

Conclusion

The Russian attacks on Kyiv in January 2026, which left thousands without power and heat during the coldest winter in 20 years, represent more than a humanitarian tragedy. They exemplify the sustained pressure Russia is exerting on Ukraine’s civilian infrastructure nearly four years into the conflict, with ripple effects extending far beyond the immediate combat zone.

For Singapore, the impact manifests primarily through indirect channels: energy cost volatility, supply chain disruptions, financial market uncertainty, and the broader fragmentation of the global economic order. While Singapore’s direct trade exposure to Russia and Ukraine remains limited, the city-state’s extreme openness to global trade and its dependence on stable international systems make it highly vulnerable to sustained geopolitical instability.

Singapore’s economy grew 4.8 percent in 2025, exceeding expectations, but Prime Minister Wong has warned that sustaining this growth will be increasingly difficult. The world is more fragmented, trade routes are being reconfigured, and geopolitical tensions have become permanent features of the global landscape.

As Singapore approaches Budget 2026 and implements findings from the Economic Strategy Review, policymakers face the challenge of maintaining economic vitality while navigating increased uncertainty. This requires strengthening energy security, diversifying supply chains, supporting households facing cost-of-living pressures, and upholding the principles of sovereignty and international law that underpin Singapore’s strategic approach.

The January 2026 attacks on Kyiv serve as a stark reminder that global stability cannot be taken for granted, and small nations like Singapore must remain vigilant, adaptable, and principled in defending the international order on which their prosperity depends.