Singapore PM Warns That Fallout From Mideast War Could Outlast Conflict

By Megan Cheah and Fabiana Negrin Ochoa

Singapore's prime minister warned the nation to brace for what lies ahead as war in the Middle East sparks an economic fallout that is set to endure even if hostilities end now.

In a speech Thursday, Prime Minister Lawrence Wong said the implications of the conflict are grave--not just for Asia but for the entire world.

The disruption of critical supply routes are a particular source of concern, especially in the Strait of Hormuz, said Wong, who is also the country's finance minister.

Around 20% of the world's oil transits through the waterway, with the bulk of crude and liquefied natural gas passing through bound for Asia. The war has effectively halted traffic through the strait, sending energy prices surging.

The shock is starting to squeeze businesses and consumer budgets, and analysts warn that the longer the strait remains shut, the higher the economic toll will be.

Wong echoed that alarm in his speech, saying that if critical Middle Eastern energy sources and supply routes remain constrained for an extended period, the consequences will be severe.

A global energy crunch would disrupt production and heap significant pressure on economies, weakening output sharply even as prices rise, a scenario known as "stagflation," said Wong.

"Once that takes hold, it is deeply damaging and very hard to bring under control," he added.

The prime minister expressed hope that diplomatic efforts to end the fighting will succeed but said that even if a ceasefire is reached tomorrow, the impact of the conflict will persist.

Energy infrastructure has been damaged, and it will likely take months to restore capacity, he said, expecting prices to remain elevated for some time.

There is also the risk of further escalation and of other groups joining the fray, widening the conflict out into new fronts, Wong said.

Earlier this week, Iranian-backed Houthi rebels in Yemen claimed responsibility for a missile attack targeting Israel.

Against that backdrop, Wong said Singapore's government will do more to strengthen energy and supply chain resilience, and cushion businesses and households from the inflationary hit.

"Singapore cannot be insulated from such global upheavals--no country can," he said.

Write to Megan Cheah at [e-mail] and Fabiana Negrin Ochoa at [e-mail]

(END) Dow Jones Newswires

04-03-26 0027ET