SINGAPORE PERSPECTIVE

Singapore, May 29, 2026. The night of May 27-28 reignited the most concrete fears for the city-state: a direct military escalation between Washington and Tehran near the Ormuz Strait, through which a fifth of global oil and LNG passes. For this city-state, whose port is Southeast Asia's first transshipment hub, each surge in tension in this strategic corridor translates directly into insurance costs, logistics disruptions, and energy volatility.

According to the Straits Times, the US military shot down four Iranian drones and struck a ground control station in Bandar Abbas, which was preparing to launch a fifth aircraft. A US official described these strikes as "measured, purely defensive, and aimed at maintaining the ceasefire" concluded in early April. In retaliation, the Revolutionary Guards targeted a US airbase without specifying its location. Kuwait, hosting a major US base, activated its air defenses against missile and drone threats, without identifying the source of the attacks.

What directly concerns Singapore is Trump's stance on Ormuz. The US president rejected any agreement entrusting Iran and Oman with managing the Strait. During a cabinet meeting, he threatened Oman – a key US ally and mediator in the conflict – with being "blown up" if it didn't comply. The US Treasury simultaneously sanctioned the Persian Gulf Strait Authority, the body set up by Tehran to collect passage fees. For Singaporean shipowners, this dual pressure – military and economic – fuels uncertainty over any lasting reopening of the corridor.

Markets reacted sharply. After plummeting over 5% on May 27 on hopes of peace, US crude rebounded by nearly 2%, reaching $90.38 per barrel in Asian trading, according to Channel News Asia. Wall Street indices closed higher, but analysts warn that resilience masks a real fragility if negotiations were to definitively fail.

The April ceasefire remains formally in place, but both sides interpret it radically differently: Washington invokes "defending commercial navigation," while Tehran denounces a "flagrant violation." For Singapore, this ambiguity constitutes the central risk – a nominally open but practically unpredictable Strait weighs heavily on regional supply chains, beyond oil, and weakens regional logistics, on which its entire economy depends.