Key View:
- Singapore’s fully liberalised fuel market structure and substantial dependence on imports mean domestic fuel prices are set to see rampant rises in the coming months, in reflection of surging global oil and gas prices amid uncertainties stemming from the war in Ukraine.
- The surging prices of oil and gas pose downside risk to forecast demand growth in Singapore, just as the island nation steps up on its post-pandemic reopening plans.
- The government has so far ruled out providing heavy fuel price subsidies or market intervention in response to higher global prices.
- The current market conditions support our long-held view for oil and gas consumption growths in Singapore to trend downwards over a longer-term horizon, as Singapore pursues ambitious climate ambitions.
Singapore’s fully liberalised fuel market structure and substantial dependence on imports mean domestic fuel prices are set to see rampant rises in the coming months, in reflection of surging global oil and gas prices amid uncertainties stemming from the war in Ukraine. For instance, pump prices for RON 92, 95, 98 and premium gasoline rose by an average of more than 25% in the year to date, to a multi-year high. The rise in motor diesel prices was more aggressive, coming in at 43% in the YTD. In addition, public bus and train fares have seen first increases in two years, while ride-hailing firms have begun to charge higher fares, to pass on higher costs to consumers. The biggest contributor to the rampant rise in domestic pump prices has been supply tightness and growing supply uncertainties in the market that has been exacerbated by the crisis in Ukraine. Singapore has minimal direct exposure to Russian oil and gas, although is 100% reliant on crude oil and natural gas as refining feedstock and inputs for the power and industrial sectors.
