Written reply to PQ on impact of tension in the Straits of Hormuz

Question

Mr Saktiandi Supaat: To ask the Minister for Trade and Industry in view of the tension building up in the Straits of Hormuz (a) how will any escalation of the situation impact on Singapore's oil trade; and (b) what are the plans to stave off any sudden spike in electricity tariffs caused to households by the resultant rise in oil prices.

Written reply

1. Mr Speaker, the Straits of Hormuz is a vital oil transit passageway.  More than 20% of global petroleum consumed passes through the straits. While the International Energy Agency (IEA) has announced that emergency oil stocks are sufficient to cover supply disruptions for an extended period, tensions in the straits can put upward pressure on oil prices.

2. Oil trading volume has remained steady so far. However, as Singapore imports almost all our energy needs, our electricity prices cannot be insulated from movements in the global energy market. Within Singapore, we promote competition in our energy market so that Singaporeans can enjoy competitive electricity prices. The Open Electricity Market (OEM) is one such initiative. Since May this year, all households and small businesses have the option to buy electricity from a retailer of their choice under the OEM. Consumer feedback has been positive so far, with thirteen electricity retailers offering a good range of competitively priced plans and households reporting savings of about 20-30%.

3. We do not subsidise electricity prices upfront, as this may encourage over-consumption and disproportionately benefit wealthier households who tend to consume more. To help lower- and middle-income HDB households cope with their utilities expenses, we provide the GST Voucher – U-Save, which gives quarterly rebates on utilities bills.