Diesel prices in Singapore have experienced a significant surge recently, raising alarms over the potential impact on business operations and consumer expenses. As of September 16, Singapore’s gasoil prices soared to approximately US$210 per barrel, a stark rise from US$111.75 per barrel recorded on June 26. Retail diesel prices also climbed to around S$4.07 per litre by September 22, though this remains below the year’s earlier peak of S$4.68 per litre.
This price hike is primarily attributed to global supply constraints and disruptions in major oil-producing regions. Factors such as restricted shipping through the Strait of Hormuz, the ongoing Russia-Ukraine conflict, and targeted attacks on oil infrastructure have fueled uncertainty in the diesel market.
The spike in diesel costs is particularly concerning for Singapore due to its heavy reliance on imports and extensive logistics and transportation networks. Increased fuel expenses are expected to burden freight operators, manufacturers, retailers, food businesses, and delivery services. Companies involved in road freight and last-mile delivery are likely to feel direct pressure, as fuel constitutes a significant part of their operating costs.
Smaller businesses with tight profit margins might absorb some of these additional costs, while others could introduce fuel surcharges or adjust delivery and transport operations. This escalation in logistics expenses may eventually trickle down to consumers, resulting in higher prices for food, retail products, and other imported goods. However, businesses might initially opt to absorb some of the cost increases or reduce discounts rather than immediately passing them on to consumers.
Given that most commercial vehicles and buses in Singapore still rely on internal combustion engines, with diesel making up a large share of the commercial vehicle fleet, fluctuations in international energy markets pose a significant risk to businesses. Industry observers anticipate that diesel prices will continue to face upward pressure in the near term, as supply disruptions and geopolitical tensions persist in affecting global fuel markets.