If you thought 2022’s energy crisis was a one-off horror movie, 2026 just dropped the sequel.
Over the past few days, oil has spiked, gas prices in Europe have jumped nearly 50% in a single day, and tankers are literally queuing outside the Strait of Hormuz like it’s the Causeway on a Friday evening.
And suddenly, something most of us only remember from O-level Geography – the Strait of Hormuz – is back on the front page.
So what’s going on? And more importantly: should we in Singapore be worried about inflation, petrol prices, and our investments?
Let me break it down.
The core issue is this: the conflict involving Iran has escalated sharply.
After US-Israeli strikes on Iran, Tehran has retaliated – not just with missiles, but by threatening the flow of energy through the Strait of Hormuz. That narrow waterway is not some small side channel. About 20–21 million barrels of oil a day – roughly a fifth of global oil and gas flows – pass through it.
Over the weekend:
- Shipping activity slowed dramatically.
- Two vessels were reportedly hit near the Strait.
- Insurers began pulling war-risk coverage.
- Oil tankers started waiting offshore instead of transiting.
Brent crude, which was already up nearly 12% over the past month, is now expected to jump another 5–15% when markets fully reopen. It had already touched around $73 before the latest escalation, and analysts are talking about $5–$10 immediate spikes.
And then came the bigger shock.
Qatar – the world’s largest LNG exporter – was forced to halt production after drone attacks on its facilities. That’s huge. Qatar supplies almost 20% of global LNG. European gas prices (TTF benchmark) surged nearly 50% in one day.
To put this in perspective:
- When Russia cut gas to Europe in 2022, about 80 billion cubic metres were affected.
- A prolonged disruption from the Middle East could exceed that.
Oil is one problem. Gas is another.
And markets are reacting exactly how you’d expect:
- Gold prices up.
- Airlines and travel stocks down.
- Equities weaker.
- The US dollar stronger.
Meanwhile, OPEC+ agreed to increase production by 206,000 barrels per day from April – but analysts are clear: if oil cannot move through Hormuz, that extra supply barely matters.
Because the issue isn’t production.
It’s transportation.
Now here’s where it gets interesting.
If you just look at supply-demand numbers, you might think: “Relax lah. Global supply is still technically sufficient. OPEC+ can pump more.”
And that’s true – on paper.
But markets don’t price oil purely on today’s supply. They price risk.
What’s happening now is a classic “risk premium” shock. Traders are not panicking because Iranian oil itself is irreplaceable. Iran produces about 4.5% of global supply – significant, but not system-breaking.
The real fear is systemic disruption:
- Closure (or effective closure) of Hormuz.
- Attacks on regional energy infrastructure.
- Escalation drawing in Saudi Arabia or UAE.
- LNG competition between Europe and Asia.
In other words, this isn’t about barrels.
It’s about chokepoints.
And this is happening in a world that was already fragile.
A former Bank of England economist recently described today’s world as “kurtotic” – not chaotic, but barbell-shaped. On one side: geopolitical disorder. On the other: technological boom (AI, productivity gains, US growth resilience).
That’s why we’ve seen:
- Gold soaring.
- Tech stocks flying.
- At the same time, long-term government bonds falling.
Investors are crowding both extremes.
But here’s the risk no one talks about enough:
If the geopolitical shock (war, trade fragmentation, energy crisis) collides with the tech boom at the wrong moment, sentiment can flip very fast.
Last year, geopolitical fears were neutralised by AI optimism.
This time?
If energy inflation surges again – especially gas – central banks could be forced into a very uncomfortable position:
- Growth slows.
- Inflation rises.
- Rate cuts get delayed.
That’s stagflation territory.
And markets are not priced for that yet.
Right now, traders are betting this disruption lasts days, maybe weeks – not months.
But energy infrastructure damage is very different from political posturing.
If LNG halt drags on, that’s when the narrative changes from “temporary spike” to “structural shock”.
And that’s when things get serious.
Now let’s bring this home.
Whenever oil and gas spike, Singapore feels it fast. We import almost all our energy. We are a refining hub. We are a trading hub. And our currency is managed partly to control imported inflation.
Here’s how I’m thinking about it.
1. Petrol and electricity bills
Higher oil prices → higher pump prices. That’s straightforward.
But the bigger risk is LNG. Singapore relies heavily on natural gas for electricity generation. If Qatar’s halt drags on and Asia has to compete with Europe for cargoes, spot LNG prices could jump sharply.
That eventually flows into:
- Electricity tariffs
- Business costs
- Airfares
- Food prices
Remember 2022? Utilities rebates, GST vouchers, Budget top-ups. MAS tightened policy aggressively to fight imported inflation.
If we see sustained energy inflation again, MAS may have less room to ease. That affects mortgage rates and business loans.
Good for savers? Maybe slightly.
Good for borrowers? Not so much.
Time to ask ah gong for more CDC vouchers.
2. Airlines, tourism, and regional markets
Higher jet fuel costs hurt airlines first. Travel-related counters often sell off quickly. If this escalates, Southeast Asian markets that rely heavily on tourism could feel pressure.
Short-term volatility in equity markets is almost guaranteed.
But here’s the nuance: volatility does not equal long-term destruction of value.
In fact, some sectors benefit:
- Energy producers
- Commodity-linked economies
- Gold-related assets
If your portfolio is 100% concentrated in growth tech funds, you may feel the swings more sharply.
This is where diversification actually earns its keep – not during calm periods, but during shocks.
3. Inflation and interest rates
This is the big one.
If oil goes to $80–$90 and gas spikes stay elevated, headline inflation will tick up globally.
Central banks are already walking a tightrope. Growth is slowing in parts of Europe and China. The US is resilient because of the AI boom, but even there, rate cuts are being priced in.
An energy-driven inflation wave could delay cuts.
Markets currently expect easing. If easing is postponed, equities could reprice.
This is why I keep reminding clients: markets don’t just react to events. They react to expectations changing.
And expectations can flip very fast.
4. How I’d position my investments (and my clients’)
Here’s how I think about navigating this kind of environment:
- Maintain global diversification across regions – not just US tech exposure.
- Ensure some allocation to energy and commodity-sensitive sectors through broader global or thematic funds.
- Consider funds with exposure to quality dividend-paying companies that can pass on higher input costs.
- Keep some allocation to defensive assets – global bonds (carefully selected duration), multi-asset income funds.
Basically whatever I’ve been saying for months now. Lol.
You see, I prefer balance.
If this conflict de-escalates in weeks, oil may retrace.
If it escalates, diversified portfolios are better positioned to absorb shocks.
Trying to time geopolitical events is like trying to predict 4D results – a lot of confident guesses, not a lot of accuracy.
5. The barbell world we’re living in
We’re in a strange environment.
On one side:
- AI productivity boom
- Strong US growth
- Tech optimism
On the other:
- Geopolitical fragmentation
- Energy chokepoints
- Trade tensions
Markets are swinging between fear and euphoria.
In this kind of “barbell” world, the worst move is emotional concentration – either all-in risk or all-in fear.
Long-term wealth building in Singapore has never been about heroic bets.
It’s about:
- Staying invested
- Managing risk
- Rebalancing when extremes appear
Energy crises feel dramatic. But portfolios built properly are designed to survive drama.
Here’s the honest truth.
If Hormuz fully closes for months and LNG infrastructure is heavily damaged, we’re talking about a global shock that will affect everyone – investors or not.
But if this is a short-lived escalation, the spike we’re seeing now may turn into another reminder that markets overreact in the short term and recalibrate later.
The difference between panic and opportunity often comes down to preparation.
I don’t control geopolitics. You don’t control oil tankers.
But we do control:
- How diversified we are
- How much risk we’re taking
- Whether we react emotionally
As always, my job is to make sure your portfolio can handle both calm seas and rough waves – using disciplined, diversified strategies that are built for the long term.
The world may feel volatile.
But disciplined investing still works.
Stay informed. Stay rational. And most importantly – stay invested.