UOB Global Economics and Markets Research has released a report assessing the macroeconomic risks posed to Singapore by the ongoing conflict in the Middle East. The report, dated 6 March 2026, highlights that whilst the direct impact on Singapore’s GDP growth is expected to be limited, inflationary pressures could be more significant due to rising oil and gas prices.
The report notes that Brent crude oil prices are anticipated to remain elevated between US$80 and US$90 per barrel in the short term, potentially easing to US$75 if the conflict remains short-lived. Singapore’s export exposure to the Middle East is minimal, accounting for only 2% of total exports in 2024. However, the import share from the region is higher, driven largely by energy-related goods.
UOB’s analysis suggests that approximately 7–8% of Singapore’s Consumer Price Index (CPI) basket is directly affected by oil and gas prices. This includes electricity, gas, petrol, and transport services. The Energy Market Authority has indicated that global energy price increases could lead to higher domestic electricity prices, although many consumers are protected by fixed-price contracts.
The report also discusses potential spillover effects on inflation from increased utility and transport costs. A US$10 increase in Brent crude oil prices could raise core inflation by 30–40 basis points. UOB maintains its 2026 core inflation forecast at 1.5%, with risks skewed to the upside if the conflict persists. The Monetary Authority of Singapore (MAS) may consider tightening policy at its April 2026 meeting by adjusting the Singapore dollar nominal effective exchange rate (S$NEER) band slope.
In summary, whilst Singapore’s GDP growth may not be significantly impacted, the ongoing Middle East conflict poses a risk of heightened inflation, prompting potential policy adjustments by MAS.
