PSP urges structural relief measures as Iran war drives up Singapore energy costs

The Progress Singapore Party (PSP) has urged the government to adopt structural economic measures — including national guidelines on rent increases and shorter work weeks — to cushion Singaporeans from the inflationary consequences of the ongoing war in Iran, which broke out when the United States and Israel launched coordinated strikes on the country on 28 February 2026.

The call came in the 13th issue of the party's newsletter, The Palm, published on 16 March 2026.

The PSP said it "deeply regrets the loss of life and escalating violence" following the strikes, as well as subsequent Israeli operations in Lebanon and Iran's retaliatory missile and drone attacks across the Middle East.

The newsletter warned that Singapore faces significant economic exposure if the conflict is prolonged, and called on the government not to rely solely on cash transfers and voucher schemes to manage the fallout.

Singapore's energy vulnerability

The PSP drew attention to Singapore's reliance on imported energy as a key source of vulnerability. The newsletter noted that more than 90 per cent of Singapore's electricity is generated from liquefied natural gas (LNG) purchased abroad, with around half of last year's supply sourced from Qatar.

That figure is consistent with data from the Energy Market Authority (EMA), which confirmed that Singapore imported approximately 6.04 million tonnes of LNG in 2025, of which close to 47 per cent — roughly 2.83 million tonnes — originated from Qatar.

Iran's actions in the Strait of Hormuz since the start of the conflict have disrupted a waterway through which approximately 20 per cent of globally traded oil and 22 per cent of global LNG normally passes. The effective paralysis of tanker traffic through the strait has sent LNG spot prices to their highest levels in more than three years.

Brent crude surged more than 13 per cent to around US$82 per barrel within days of the initial strikes. By 12 March, crude prices had climbed further to US$93.74 per barrel — a near 30 per cent increase from January 2026 levels.

Singapore's pump prices have risen sharply in tandem. The most popular grade of petrol — 95-octane — is now approximately 20 per cent more expensive at major service stations than it was on 28 February, according to industry data reported by The Straits Times.

Qatar gas facilities struck

The scale of the disruption was compounded by strikes on Qatari gas infrastructure. On 2 March, the Qatari Ministry of Defence announced that two Iranian drones had attacked Qatari gas facilities, after which QatarEnergy announced a halt to all gas production in the country.

European natural gas prices nearly doubled in the immediate aftermath. Several global LNG suppliers, including Shell, subsequently issued force majeure notices, citing unforeseeable circumstances that prevented them from fulfilling contractual supply obligations.

Minister for Manpower and Minister-in-Charge of Energy and Science and Technology Tan See Leng acknowledged in a 12 March Facebook post that Singaporeans should expect electricity prices to rise in the coming months.

He said the government was working to replace disrupted LNG cargoes with alternative sources, and pointed to Singapore's dual-fuel power generation capability and strategic fuel stockpiles as buffers against a severe supply disruption.

Tan also confirmed that eligible Housing and Development Board (HDB) households would receive up to S$570 in U-Save rebates as part of Budget 2026 measures — one-and-a-half times the standard annual amount — to help offset rising utility bills.

PSP presses for structural solutions

The PSP argued that ad hoc transfers of the kind already announced would be insufficient if inflation proves persistent. The party drew a parallel with the inflationary episode that followed Russia's invasion of Ukraine in February 2022, when global energy price shocks fed through to consumer prices across the region.

"If the crisis results in prolonged inflation, we hope the government will not rely solely on CDC vouchers and Cost-of-Living payments to cushion the impact," the party wrote in The Palm.

The PSP proposed that national guidelines on rent increases be introduced as a structural measure to reduce business costs, arguing that rental pressure is a significant driver of inflation that current policy does not directly address.

On energy demand, the party called for incentives to encourage work-from-home arrangements where operationally feasible, and for consideration of shorter work weeks — citing Thailand and the Philippines as regional neighbours that have adopted the four-day work week model in response to the energy crisis.

Al Jazeera reported on 12 March that the Philippine government had moved government offices to a four-day schedule, while Thai and Vietnamese officials had been encouraged to limit travel and work remotely.

Regional economic fallout

The broader economic damage from the conflict is becoming clearer. The International Monetary Fund warned that every ten per cent increase in energy prices over the course of 2026 is expected to add close to half a percentage point to global inflation.

Analysts  have flagged a tail-risk scenario of oil prices approaching US$120 per barrel if the conflict continues.

According to Wikipedia's entry on the economic impact of the 2026 Iran war, Singapore and Taiwan are among the economies most exposed to Qatari LNG disruption in Asia, while the Philippines, Vietnam and Thailand face heavy dependence on Persian Gulf crude.

Singapore has sought to manage the situation through supply diversification. Tan said importers were pursuing alternative LNG cargoes from Australia and the United States, both of which are less exposed to Strait of Hormuz disruptions.

For now, the government and the PSP appear to agree on at least one point: that the conflict is a structural warning about Singapore's energy security, not merely a short-term price shock. Where they diverge is on the scope and nature of the policy response.