SINGAPORE: Oil prices surged above US$110 (S$141) per barrel on Monday (March 9) as the war in the Middle East disrupted shipments through the Strait of Hormuz — a narrow but vital waterway through which nearly one-fifth of the world’s oil normally passes.
The disruption has raised fears of a major supply shock, particularly in Asia, which relies heavily on crude oil from the Gulf. Nearly 60% of the region’s oil imports come from the Middle East, amounting to roughly 14.7 million barrels per day.
As tensions in the Gulf threaten to choke one of the world’s most important energy routes, attention is turning to a quieter but crucial stabilising force in the region’s fuel supply chain: Singapore.
The city-state is the world’s third-largest oil-refining centre after Houston and Rotterdam. With refineries capable of processing about 1.38 million barrels of crude each day, vast storage facilities, and one of the world’s busiest oil trading hubs, Singapore plays a key role in ensuring fuel continues to reach markets across Asia when global supply chains are disrupted.
During periods of geopolitical tension, the island’s refining capacity, storage reserves and trading network allow crude from multiple sources to be processed, blended and redistributed across the region — effectively acting as a buffer that helps stabilise fuel supply even as global oil routes tighten.
Singapore imports crude oil from a wide range of countries, reflecting its role as a global energy trading hub. Crude from major Middle Eastern producers is regularly shipped to Singapore’s refineries for processing. However, Singapore also had supplies from Russia and from neighbouring Malaysia. The diversity of sources “reduces vulnerability to single-region disruptions while enabling optimal crude slate selection based on current market pricing and refinery configuration requirements.”
Jurong Island, in particular, hosts over a hundred global energy and chemical companies. Having attracted over S$50 billion in investments over the past three decades, it has become a key integrated refining and petrochemical cluster that employs 27,000 people and contributes around 3% of Singapore’s gross domestic product (GDP).
Singapore as a regional energy shock absorber
Beneath the Banyan Basin on Jurong Island, some 130 metres underground, lie the 61-hectare Jurong Rock Caverns. These caverns provide a large storage facility for crude oil and petroleum products for companies on the island, including Shell, ExxonMobil, and Chevron Phillips, and allow for the stockpiling of oil.
Additionally, because Singapore has become the biggest hub for oil trading and storage in Asia, with a comprehensive network of refining, shipping, trade, and financial services, the city-state’s energy system is likely to prove all the more vital amid the disruptions due to the war in Iran.
A week after the war in Iran, which quickly spilt over to other parts of the Middle East, began, Reuters reported that Asia’s refining margins started surging to their highest levels since 2022. The report pointed out how refining margins in Asia surged to almost US$30 per barrel due to shortages in crude oil and the likelihood of further tightening. All the more, therefore, are hubs such as Singapore important as they ensure fuel supply.
As refining margins surge and supply routes tighten, Singapore’s vast energy infrastructure is once again proving critical in keeping fuel flowing across Asia despite disruptions in the Gulf. /TISG
Read also: Indonesia’s oil import paradox—relying on Singapore for fuel despite domestic reserves
