Introduction: A City-State at the Crossroads of Global Energy Security

As Iranian Foreign Minister Abbas Araghchi arrives in Geneva for critical nuclear negotiations with the United States, and Revolutionary Guards conduct military exercises in the Strait of Hormuz, Singapore finds itself in an unexpectedly precarious position. Despite being thousands of kilometers from the Persian Gulf, this Southeast Asian city-state has more at stake in the outcome of these talks than almost any other nation its size.

The convergence of diplomatic maneuvering in Switzerland and military posturing in the Middle East creates a perfect storm of risk for Singapore’s economy, which has been meticulously constructed around a single strategic premise: transforming imported crude oil into refined products and petrochemicals for re-export across Asia. Any disruption to the Strait of Hormuz, through which approximately 20 percent of global oil flows, would strike at the heart of Singapore’s economic model.

Singapore’s Hidden Oil Dependency

Singapore was among the top five destinations for crude oil moving through the Strait of Hormuz to Asia in 2018 Fox News, a status that persists today. The irony is stark: Singapore possesses no indigenous hydrocarbon reserves whatsoever, yet it ranks as the world’s third-largest oil refining center after the US Gulf Coast and Rotterdam, with approximately 1.5 million barrels per day of refining capacity Wikipedia.

In 2014, Singapore imported approximately 950,000 barrels per day of crude oil, with more than two-thirds coming from the United Arab Emirates, Saudi Arabia, and Qatar Woodlands Checkpoint. More recent data confirms this pattern has intensified. Singapore Petroleum Company sources the bulk of its crude supplies from the Middle East EMA, while the Singapore Refining Company operates with a typical crude slate that is 90 percent Middle Eastern and 10 percent Far Eastern crudes The Observatory of Economic Complexity.

This overwhelming reliance on Middle Eastern crude creates a direct vulnerability to any Strait of Hormuz disruption. In 2024, approximately 84 percent of crude oil and 83 percent of liquefied natural gas moving through the Strait of Hormuz went to Asian markets CNBC, making the region’s economies particularly exposed to supply shocks.

The Refining and Petrochemical Complex: Singapore’s Economic Crown Jewel

Singapore’s petroleum sector represents far more than energy security; it constitutes a fundamental pillar of the national economy. The oil industry is responsible for approximately five percent of Singapore’s gross domestic product, generating an estimated 57 billion Singapore dollars in 2009 Wikipedia.

The scale of operations on Jurong Island, Singapore’s petrochemical hub, is extraordinary. Around 95 petroleum organizations operate on Jurong Island Wikipedia, including three major refineries: ExxonMobil’s facility with 592,000 barrels per day capacity, Shell’s Pulau Bukom refinery processing 458,000 barrels per day, and Singapore Refining Company handling 290,000 barrels per day. These facilities don’t simply process crude for domestic consumption; they form an integrated value chain connecting Middle Eastern crude suppliers with Asian end markets.

In 2014, Singapore ranked among the top ten exporters of refined oil products in Asia, with more than half of its exports going to Malaysia, Indonesia, and Australia Woodlands Checkpoint. This export orientation means Singapore’s refineries serve as a critical intermediary in Asian energy supply chains. In 2023, Singapore exported approximately 69.4 billion kilograms of refined petroleum products valued at nearly 57 billion US dollars, with Indonesia receiving 11.86 billion kilograms worth 9.64 billion dollars Windows.

The Natural Gas Dimension: A 95 Percent Dependency

While crude oil dominates discussions of Strait of Hormuz vulnerabilities, Singapore faces an equally critical exposure through natural gas. As of October 2025, approximately 95 percent of Singapore’s electricity is generated with natural gas Carnegie Endowment for International Peace.

This near-total dependence on natural gas for power generation creates an existential vulnerability. Singapore depends heavily on energy imports to meet domestic needs, with liquefied natural gas supplying about 95 percent of electricity generation U.S. Energy Information Administration. The country has sought to diversify sources by opening its first LNG terminal in 2013 and planning a second floating regasification unit, but these measures address supplier diversity rather than route dependency.

Approximately 22 percent of global liquefied natural gas trade passes through the Strait of Hormuz Al Jazeera, meaning any sustained closure would immediately impact Singapore’s ability to generate electricity for its 5.9 million residents and power-intensive industries.

Price Volatility and Economic Competitiveness

With high dependence on energy imports, especially LNG, Singapore has little control over energy prices, as LNG prices closely track oil prices U.S. Energy Information Administration. This vulnerability manifests in two critical ways.

First, any Strait of Hormuz disruption would trigger immediate price spikes. Historical precedent from June 2025 illustrates this dynamic: when questions arose about the strait’s security, Brent crude oil increased from 69 US dollars per barrel on June 12 to 74 dollars per barrel on June 13 CNBC. For Singapore’s refineries operating on thin margins in a competitive regional market, such volatility can quickly render operations unprofitable.

Second, Singapore’s manufacturing competitiveness depends on stable, affordable energy. High utilities, rental, and labor costs mean Singapore cannot compete on a cost basis with its neighbors U.S. Energy Information Administration. Energy price shocks would accelerate the erosion of Singapore’s competitive position against refineries in China, the Middle East, and elsewhere that benefit from lower feedstock costs.

The Broader Maritime Trade Exposure

Beyond petroleum, Singapore’s position as a global maritime hub creates additional vulnerabilities. About one-fifth of global oil shipments pass through the Strait of Hormuz, and in 2025, the Strait handled about 34 percent of all seaborne-traded oil Asianometry.

Between June 2024 and June 2025, Singapore received significant containerized exports from Gulf ports, highlighting the Gulf’s role as a critical launch point for goods moving between continents Wikipedia. A strait closure would disrupt not only energy flows but also the broader pattern of containerized trade that sustains Singapore’s port operations.

As the Strait is designated a high-risk area, vessels’ standard insurance may be insufficient and additional premiums are required to cover increased risk Wikipedia. Even without an actual closure, heightened tensions drive up insurance costs, which ultimately flow through to Singapore’s trade-dependent economy.

Strategic Alternatives: Limited and Insufficient

The strategic question facing Singapore is stark: what alternatives exist if the Strait of Hormuz becomes impassable or prohibitively expensive to transit?

The answer is sobering. Only Saudi Arabia and the United Arab Emirates have pipelines that can ship crude oil outside the Persian Gulf, with estimated capacity of 6.5 million barrels per day at the end of 2018 Fox News. However, only 3.8 million barrels per day of unused capacity could have bypassed the strait Fox News, far short of the approximately 20 million barrels per day that typically transit through Hormuz.

For natural gas, the situation is even more constrained. Qatar, which supplies much of Asia’s LNG, has no practical alternative to the strait for its shipments. During the June 2025 crisis, Qatar instructed all LNG carriers to hold off transiting through the strait until the day before loading and to remain east of Hormuz Gbreports, demonstrating how quickly precautionary measures can disrupt supply chains.

Singapore has attempted to build resilience through diversification. Singapore is looking to import electricity from other countries and is considering the use of nuclear energy from 2040 onwards Windows, while the country plans for hydrogen to meet up to half of Singapore’s power needs by 2050 Carnegie Endowment for International Peace. Yet these long-term transitions offer little protection against near-term disruption scenarios.

Economic Ripple Effects: From Refineries to Retail

The interconnected nature of Singapore’s economy means Strait of Hormuz risks cascade through multiple sectors. The petroleum industry’s five percent contribution to GDP understates its systemic importance, as energy costs affect virtually every economic activity.

For Singapore’s aviation sector, particularly Changi International Airport—one of Asia’s busiest hubs—jet fuel price spikes would immediately impact airlines’ operating costs. Large quantities of petroleum and jet fuel transit toward East Asia to serve demand from mega airports including Singapore’s Changi International Airport IEA.

Singapore’s petrochemical sector, which produces plastics, polymers, and chemical feedstocks, depends on stable naphtha supplies from refineries. Naphtha from refineries is sent via pipeline to Singapore Petrochemical Company’s ethylene plant U.S. Energy Information Administration. Disrupted crude supplies would constrain naphtha production, affecting downstream chemical manufacturers throughout Southeast Asia.

Should oil prices rise quickly, there could be knock-on effects for the economy, with a sharp price rise quickly escalating costs for many businesses and hurting Singapore’s economic growth prospects U.S. Energy Information Administration.

Singapore’s Strategic Dilemma in Iran-US Relations

The current negotiations place Singapore in a delicate diplomatic position. As a trade-dependent nation that has cultivated careful neutrality in great power competition, Singapore has significant interests in the talks’ success but limited ability to influence outcomes.

Singapore’s diplomatic stance has historically emphasized rule-based international order and freedom of navigation. The Strait is regulated by the UN Convention on the Law of the Sea of 1982, with a Traffic Separation Scheme recognized by the UN’s International Maritime Organization Asianometry. Any Iranian attempt to close the strait would violate these international legal frameworks that Singapore depends upon for its own maritime security.

Yet Singapore must also maintain workable relationships with all parties. China, Singapore’s largest trading partner, is Iran’s primary oil customer and has benefited greatly from the US embargo on Iranian oil as Beijing imports discounted Iranian crude India TV News. Any Singapore position that appears to align too closely with US interests could complicate its relationship with China.

The February 2026 Negotiations: What’s at Stake for Singapore

The current talks represent Singapore’s best near-term hope for reducing Strait of Hormuz risk. A successful agreement that prevents military escalation and keeps the strait open would provide Singapore with continued access to affordable Middle Eastern crude and LNG.

The negotiations face substantial obstacles. Iran possesses considerable uncertainty around more than 400 kilograms of 60 percent enriched uranium Al Jazeera, while the US and Israel demand comprehensive restrictions on Iran’s nuclear program. Iranian politicians have repeatedly threatened to block the strait, through which about 20 percent of global oil passes Al Jazeera, using this leverage to pressure Western negotiators.

As long as Iran’s oil infrastructure is not damaged, Iran is unlikely to close the Strait of Hormuz since it would affect Iran’s oil exports and its economy The Times of Israel. However, approximately 90 percent of Iran’s oil exports pass through the Strait of Hormuz, representing approximately 83 percent of all Iranian exports Axios, meaning Tehran would only resort to closure in extremis—precisely the scenario negotiations aim to prevent.

Risk Mitigation Strategies: Singapore’s Policy Options

Faced with structural vulnerabilities, Singapore has pursued multiple risk mitigation strategies, though none fully addresses the Strait of Hormuz exposure.

Strategic Petroleum Reserves: The International Energy Agency requires member countries to maintain stockpiles accounting for ninety days of import consumption Gulf News. Singapore’s participation in IEA mechanisms provides a buffer, though 90 days would pass quickly in a sustained closure scenario.

Source Diversification: Singapore has sought to diversify its crude sources beyond the Middle East. The Bukom refinery currently receives crude from the Middle East, Malaysia and Brazil on smaller tankers International Trade Administration, though the Middle East remains dominant.

Energy Transition: Singapore plans to improve energy efficiency by 36 percent by 2030 compared to 2005 levels Carnegie Endowment for International Peace and is dramatically expanding solar capacity. However, even if all of Singapore was covered with solar panels, solar would still not produce enough energy for all needs U.S. Energy Information Administration.

Regional Electricity Imports: In October 2024, Sun Cable was granted conditional approval to import 1.75 gigawatts of electricity from Australia via a 4,300 kilometer subsea cable Carnegie Endowment for International Peace, though this project remains years from completion.

Lessons from Previous Crises

Historical precedent offers limited comfort. During the Iran-Iraq War’s eight years, 411 ships were attacked, 239 of which were petroleum tankers, yet despite repeated threats, Iran did not follow through with closing the Strait of Hormuz Gulf News. However, even partial disruption caused significant market distortions.

Between 1984 and 1987, during the “Tanker War,” shipping in the Persian Gulf dropped by 25 percent, forcing United States intervention to secure oil shipping lanes LDI Training. Singapore’s refineries, which depend on steady crude throughput to maintain profitability, would struggle with similar disruption levels in today’s competitive environment.

The China Factor: A Complicating Variable

China’s role adds complexity to Singapore’s position. China surpassed the United States as the world’s top annual importer of crude oil in 2017 and is acutely vulnerable to disruption in oil supplies from the region India TV News. This shared vulnerability creates potential grounds for regional cooperation on energy security.

However, Beijing is by far the largest importer of Iranian oil and Iran’s main trading partner, having signed a twenty-five-year comprehensive strategic partnership in March 2021 involving sales of discounted Iranian oil India TV News. China thus has incentives both to prevent strait closure (protecting its energy supplies) and to maintain good relations with Iran (securing discounted crude).

Singapore must navigate this tension carefully. Any crisis that forces Singapore to choose between its economic relationship with China and its security reliance on US-guaranteed freedom of navigation would pose profound strategic challenges.

Conclusion: Negotiations Matter More Than Singapore Can Influence

The Iran-US negotiations unfolding in Geneva carry disproportionate consequences for Singapore, yet the city-state has minimal ability to shape their outcome. Singapore’s decades-long strategy of building a petroleum refining and petrochemical hub based on Middle Eastern crude has created a structural vulnerability that cannot be quickly remedied.

The fundamental arithmetic is stark: Singapore depends on the Middle East for approximately two-thirds of its crude imports, processes this crude through refineries that contribute five percent of national GDP and sustain thousands of high-skilled jobs, and generates 95 percent of its electricity from natural gas, much of which transits the Strait of Hormuz. Any sustained disruption to the strait would immediately impact energy costs, refinery operations, electricity generation, and broader economic competitiveness.

The current negotiations represent the best near-term mechanism for managing these risks. A diplomatic solution that prevents military escalation, maintains freedom of navigation through the strait, and addresses Iran’s nuclear program through verifiable limits would serve Singapore’s interests far better than any alternative scenario.

Yet Singapore’s experience illustrates a broader challenge facing globalized trade-dependent economies: decades of strategic decisions create path dependencies that cannot be easily reversed. The city-state’s remarkable economic success has been built on a foundation of imported energy and open sea lanes. As great powers maneuver in Geneva and military exercises proceed in the Strait of Hormuz, Singapore can only watch and hope that diplomacy prevails—because the alternatives would fundamentally challenge the economic model that has underwritten its prosperity.

The February 17 talks may be occurring in Switzerland, but their success or failure will be measured in Singapore’s refineries, power plants, and across its energy-intensive economy. For a nation with no oil of its own that has become one of the world’s largest petroleum hubs, the stakes could hardly be higher.