In charts: Singapore’s energy and chemicals sector in focus as Middle East conflict escalates

[SINGAPORE] Singapore’s energy and chemicals sector has come under the spotlight as conflict in the Middle East escalates. As oil prices hit a four-year high on Monday (Mar 9), observers noted that the sector faces a “very grim” outlook.

Although oil prices have since corrected, the shock has renewed concerns over the vulnerability of one of Singapore’s key pillars.

Energy and chemicals are a vital component of Singapore’s export-oriented economy, with the sector contributing to about 2 to 3 per cent of gross domestic product, and accounting for around 23 per cent of total manufacturing output.

The Republic is especially vulnerable to conflict in the Middle East as well, since it is a net importer of energy products.

Singapore relies on imported natural gas to generate 95 per cent of its electricity. In 2025, 43 per cent of its gas imports was piped from Malaysia and Indonesia; the remainder was liquefied natural gas (LNG) from various parts of the world. A sizeable portion of LNG is shipped from Qatar.

Singapore’s energy regulator has warned that with elevated gas prices, electricity prices could also rise.

Jurong Island, which marked its 25th anniversary last year, is one of the region’s premier hubs for crude oil refining and petrochemical production, with more than 100 companies.

Refineries and crackers are among the first to feel the direct impact of the Iran conflict. With shipping congestion at the Strait of Hormuz, there is disruption in the supply of naphtha, a hydrocarbon that is required to produce olefins – chemicals such as ethylene needed to make plastics, fibres and other essential products.

Key players Aster and PCS have declared force majeure in the past week – a move that companies make to excuse themselves from obligations and liabilities under unforeseen circumstances, such as war and natural disasters.

Jurong Island houses multiple chemical manufacturers, such as Sumitomo Chemical, Saudi Basic Industries Corporation and rubber maker Arlanxeo.

With refineries and crackers under pressure, manufacturers are set to feel more strain in feedstock supply.

For instance, with the absence of supplies from PCS, polyolefins producer TPC declared force majeure on Mar 9 after shutting multiple plants on Jurong Island, based on a report by trade publication Argus.

The big green pivot

Amid uncertainty over how long the Middle East conflict will last, Singapore’s energy and chemicals sector could undergo more pain.

That said, the sector is also transforming – reducing its reliance on fossil fuels and pivoting into green businesses.

Last year, Singapore allocated close to 300 hectares of land on Jurong Island for new energy solutions, such as energy-storage systems and ammonia. It also unveiled plans to develop the island into a hub for specialty chemicals and sustainable materials.

Such diversification could fortify the sector against disruptions in oil and gas, and prepare it for the future.