Pump prices in Singapore rise amid widening Middle East conflict

SINGAPORE - Prices of petrol have climbed as the conflict in the Middle East, which has shut a crucial channel for oil supplies, escalates with no end in sight.

SPC raised its posted price of the popular 95-octane fuel by four cents from $2.87 to $2.91 at 3pm on March 4, becoming the latest operator to adjust pump prices.

Shell was the first to raise its posted price of 95-octane fuel, also by four cents, to $2.92 per litre on the morning of March 3.

Caltex increased its prices to match Shell’s past midday, a move that was followed closely by Esso. Sinopec backed the trend hours later.

A Shell spokesperson declined to comment on why it has raised the prices of its fuel and diesel.

What motorists actually pay at the pump may differ from posted prices, which do not factor in discounts.

SPC raised the price of its 92-octane petrol by four cents to $2.88, bringing its price to the same level as Esso and Caltex. Shell and Sinopec do not offer 92-octane petrol. SPC also raised its regular 98-octane petrol by four cents to $3.42, on a par with Esso and Sinopec, with the priciest being at Shell at $3.44.

The so-called premium 98-octane option ranges from $3.55 at Sinopec to $3.66 at Shell.

Commercial fleet owners and taxi drivers were not spared, with diesel pump prices rising in tandem. The highest posted price is $2.70 at Shell, Esso and Caltex, with the lowest at $2.61 at SPC.

The Consumers Association of Singapore (CASE) is closely monitoring the situation and has urged fuel companies to exercise restraint in raising prices pre-emptively.

Analysts said the surge in global oil prices on fears of an extended supply disruption in the Middle East has filtered into local petrol pumps, with operators pricing in higher freight and insurance costs in advance.

A notice put up by Esso at petrol stations stated that retail pump prices “have changed” effective from 1pm on March 3, without linking the increases to the Middle East. The operator has raised prices of petrol by four cents and diesel by five cents.

Consumers appear to be taking the increase in prices in their stride for now.

Musician Alvin Wong, who was topping up his tank at an Esso pump in Ang Mo Kio, told The Straits Times that he was aware that prices had risen.

“I hope it does not continue rising. Even if petrol prices rise, I still have to pump petrol,” the 65-year-old said.

Van driver Peter Teo, 73, was not sure how much fuel prices had risen by, but said the increases were “scary”.

“I think prices will continue increasing because of the war,” he said.

Meanwhile, a private-hire driver who wanted to be known as Mr Lim said he felt the new rates were manageable.

The 63-year-old said: “I am not unhappy about it. The price increase is unavoidable because of the war.”

Still, unhappiness is rising, especially among taxi and private-hire drivers.

A worker at a Shell petrol station in the vicinity said drivers have been “comparing how much it is to pump petrol now compared with the day before”.

“Some of them are upset about the price increases, especially the taxi drivers,” he said.

A taxi driver who only wanted to be known as Mr Toh, said his peers had informed him about the price increases, as he has not been to the kiosk to refuel.

The 54-year-old said: “I am definitely unhappy. Iran has only been at war for days. Why did the price increase happen immediately?

“This is daylight robbery. It is not even new oil that has arrived from war affected places, this is still the old oil.”

Mr Toh expects the raised prices to have a big impact on his business. “If I keep driving and there are no customers, I will waste petrol money and my time,” he said.

“If I don’t drive, I have no income. It’s a real headache.”

A spokesperson for ride-hailing platform Grab told ST that it provides fuel discounts through its partnerships with Caltex, Shell and Sinopec to help driver and delivery partners manage costs.

“We will continue to monitor the situation closely and are engaging with the unions and our industry partners to explore further ways to extend support,” the spokesperson said.

NTUC assistant secretary-general Yeo Wan Ling said the union recognises that fuel is one of the largest operating costs for taxi drivers, private-hire drivers and delivery riders.

She said NTUC has started engaging taxi companies that operate their own fuel pumps “to ensure that fuel rates for taxi drivers remain fair and sustainable”.

“In parallel, we are in discussions with taxi companies and platform operators to explore additional ways to support drivers and riders during this period of rising cost pressures,” she added.

Ms Yeo noted that the platform work associations she is an adviser to – the National Taxi Association, National Private Hire Vehicles Association, and National Delivery Champions Association – have negotiated pump discount rates with most petrol stations, and are working to expand these partnerships.

Global energy prices have surged as the US-Israel war on Iran halted exports from the oil-and-gas rich region.

An Iranian Revolutionary Guards senior official said on March 2 that the critical Strait of Hormuz was closed and vowed to attack any ship trying to pass. The waterway typically handles a fifth of the world’s oil and large volumes of gas.

Israeli and US forces have since struck targets across Iran, prompting Iranian retaliatory strikes around the Gulf as the conflict widened to Lebanon.

Mr Song Seng Wun, economic adviser at the SDAX investment platform, said that a spike in crude oil prices usually results in higher fuel prices.

“The pass-through effect is almost immediate,” he said.

“As a trade dependent economy and a major refining and petrochemical hub, Singapore sits at the intersection of energy flows and maritime trade. Disruptions in the Gulf translate quickly into higher freight costs, insurance premiums and potential volatility in refined product margins.”

OCBC chief economist Selena Ling said petrol pumps are sensitive to increases in crude and freight prices. She added that operators have moved to “price in the risk of disruption in anticipation of higher costs”.

Singapore relies heavily on the Middle East for petroleum. It refines and re-exports a portion of its supply to countries in the Asia-Pacific region.

Geopolitical developments can put pressure on commodity prices amid fears of a persistent disruption in supply routes.

In March 2022, the Ukraine crisis triggered several rounds of increases in fuel prices, with the 95-octane petrol breaching the $3 mark. Fuel pump prices reached new highs several months later, with a litre of the costliest grade of petrol crossing $4 for the first time.