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Oral reply to PQ on effects of Saudi Arabia oil supply disruptions

8 October 2019

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Questions

Mr Saktiandi Supaat: To ask the Minister for Trade and Industry in light of sudden incidences of disruptions of Saudi Arabia's oil supply and the potential risk of such incidences happening (a) what is the impact on Singapore's economy; (b) how will this affect the prices of our electricity supply to consumers; and (c) how will this affect prices of petrol for motor vehicles.

Mr Leon Perera: To ask the Minister for Trade and Industry with regard to the recent attack on Saudi Arabia's oil production facility (a) what has been the impact on Singapore's oil imports from Saudi Arabia; (b) whether oil prices are expected to rise and impact inflation as a result of these attacks and their aftermath; and (c) what is being done to manage the risk of rising oil prices.

Oral Answer (to be attributed to Senior Minister of State for Trade and Industry Dr Koh Poh Koon)

  1. Mr Speaker, may I have your permission to answer questions 3189 and 3206 together. 

  2. In the immediate aftermath of the 14 September 2019 attacks on Saudi Arabia’s oil infrastructure, the benchmark Brent crude oil price surged from US$60 to US$71 per barrel. However, it retreated when Saudi Arabia and the US pledged to maintain a steady supply of oil, and has since stabilised at around US$59 per barrel[1]. For 2019 as a whole, the Brent oil price is projected to average US$63 per barrel, lower than the US$71 per barrel in 2018. 

  3. Given that global oil prices have stabilised and oil production capacity in Saudi Arabia has returned to normal, MTI’s assessment is that the impact on the Singapore economy is likely to be limited. First, our oil supply remained sufficient throughout the period of outage. Second, the impact on consumer prices is likely to be small. 

  4. However, this incident is a useful reminder to us about the importance of energy security, especially given ongoing tensions in the Middle East. This is particularly pertinent to Singapore as we import almost all our energy. 

  5. The Government adopts several strategies to secure our energy supply and keep energy prices competitive. First, we ensure resilience in our energy supply by diversifying our sources of crude oil and gas. We encourage our oil and gas traders to import from multiple sources, while our oil refineries leverage their global resources and supply chains, as well as the wider oil trading ecosystem, to ensure a continuous supply of crude oil if there is a disruption in any supply source. 

  6. Second, while electricity prices in Singapore cannot be insulated from global energy price movements, Singaporeans can enjoy competitive electricity prices because we continue to promote competition in our electricity market. The Open Electricity Market (OEM) is one such initiative to give households and small businesses more choices of retailers to buy electricity from. Since we launched the OEM in May this year, households and small businesses have reported savings of about 20 to 30% on their electricity bills.

[1] As of 2 October

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