Markets had a mixed day yesterday, with investors on edge awaiting clarity on whether the attacks on Saudi oil facilities will significantly disrupt global supplies.
The Straits Times Index (STI) lost 20.93 points, or 0.65 per cent, to 3,183 on trade of 1.02 billion securities worth $838.33 million. Losers outpaced gainers 224 to 154.
Shares in Australia, New Zealand and Japan ended higher. China and Hong Kong ended lower, while South Korea closed flat.
Ms Esty Dwek, head of global market strategy at Natixis Investment Managers, said the oil price spike was not a surprise following the drone strike, which impacted about 5 per cent of global supply.
"The question is how long it takes for the supply to get back online. However, the risk premium of geopolitical risk, which has been basically ignored by markets in favour of growth worries in recent months, is likely to be priced in going forward," she said.
"While we've already seen a retreat in prices, they will probably not come all the way back down, pricing in for some risk of further disruptions."
The higher oil prices benefited local companies such as energy services firm Rex International, which gained 6.9 per cent to 9.3 cents on 88.44 million shares traded.
TEE International was also in the money, surging 20 per cent to 4.2 cents with 67.8 million shares traded. The engineering group said on Monday night that controlling investor Phua Chian Kin will sell 150 million of his shares, or a 23 per cent stake, for $9 million in cash.
Mr Phua has been in the spotlight for allegedly instructing unauthorised transactions totalling $6.55 million made by TEE International subsidiaries to related parties.
Yangzijiang Shipbuilding remained the most heavily traded STI counter, a position it has held for more than two weeks running. It closed flat at $1.08 with 40 million shares traded.
Keppel DC Reit also saw active trading, coming off a fund-raising exercise to partially finance the acquisition of two data centres. Units closed up 7.2 per cent to $1.93 on trade of 21.56 million units.
Investors will be watching the United States Federal Reserve overnight as it meets to announce its interest rate decision.
Mr Mati Greenspan, a senior market analyst at trading platform eToro, noted that the Saudi oil facility attacks are "quite serendipitous" for the Fed, as it has had limited justification for cutting interest rates amid a hot job market and optimal inflation.