Executive Summary

The Trump administration’s “America First” energy policy represents a significant shift in U.S. approach to global oil markets, combining domestic production expansion with aggressive foreign policy toward resource-rich regions. This assessment evaluates potential scenarios, their likelihood of success, and specific implications for Singapore’s energy security and economic interests.

Policy Framework Analysis

Current U.S. Energy Strategy

The Trump administration has implemented three core pillars:

1. Domestic Production Expansion (“Drill, Baby, Drill”)

• Declaration of national energy emergency (January 2025)
• Rapid deregulation of domestic oil and gas production
• Goal: Solidify U.S. position as global energy leader
• Current production: 13.2-13.6 million barrels/day

2. Maximum Pressure on Adversaries

• Iran: Renewed sanctions targeting zero oil exports
• Venezuela: Direct intervention and oil asset seizures
• Russia: Secondary sanctions on oil trade

3. Energy as Foreign Policy Tool

• Leveraging energy dominance for geopolitical advantage
• Using sanctions to shape behavior of resource-rich states
• Threatening secondary sanctions on buyers of sanctioned oil

Regional Scenarios & Likelihood Assessment

Scenario 1: Venezuela Oil Acquisition

Approach: Direct U.S. involvement in Venezuelan oil sector following political intervention

Likelihood: MEDIUM (40-50%)

Factors Supporting:

• Venezuela holds 303.8 billion barrels (world’s largest reserves)
• Existing U.S. refinery infrastructure designed for Venezuelan heavy crude
• Political instability creates intervention opportunities
• U.S. companies previously engaged by administration

Factors Against:

• Legal and international legitimacy challenges
• Production infrastructure severely degraded (requires massive investment)
• Complex political situation with multiple competing factions
• Chinese and Russian economic interests entrenched
• Current Venezuelan production: ~600,000 bpd (down from 3+ million peak)

Singapore Impact:

• Minimal direct impact (Venezuela not major Singapore supplier)
• Could affect global heavy crude pricing
• Potential precedent concerns for international oil trade rules

Scenario 2: Maximum Pressure on Iran

Approach: Drive Iranian oil exports to zero through sanctions enforcement

Likelihood: LOW (20-30%)

Current Status:

• Iran exporting 1.65-1.8 million bpd (similar to Biden administration levels)
• 95% going to China despite U.S. sanctions
• Trump’s stated goal: reduce to 100,000 bpd or zero

Factors Preventing Success:

• China’s unwillingness to comply (Iran supplies 15%+ of Chinese crude)
• Sophisticated Iranian evasion networks (shadow tankers, ship-to-ship transfers)
• Global oil market oversupply reduces leverage
• Secondary sanctions on China would escalate trade war
• European enforcement cooperation limited

Market Impact if Successful:

• 1.5 million bpd removal would tighten supply
• OPEC+ has 5+ million bpd spare capacity to compensate
• Price impact: $5-15/barrel increase (manageable)

Singapore Impact:

• Moderate risk to oil trading operations
• Potential disruption to regional refining feedstock
• Singapore trading/storage facilities could benefit from rerouting flows
• Risk of being caught between U.S. and Chinese interests

Scenario 3: Middle East Energy Infrastructure Conflict

Approach: Direct military action affecting Persian Gulf oil flows

Likelihood: LOW-MEDIUM (25-35%)

Risk Factors:

• Recent Israel-Iran “12-Day War” (June 2025) demonstrated vulnerability
• Strait of Hormuz remains critical chokepoint (20% of global oil)
• Iranian threats to close strait if pressured
• U.S. strikes on Iranian nuclear facilities set precedent

Mitigating Factors:

• Ceasefire currently holding
• Iran economically dependent on oil exports through strait
• Historical evidence: Strait never fully closed even during Iran-Iraq War
• Market currently oversupplied, reducing Iranian leverage
• Both U.S. and China prefer price stability

Singapore Impact:

• CRITICAL RISK – 20% of global oil flows through Strait
• Singapore imports 100% of energy needs
• Direct impact on LNG and oil supply routes
• Singapore’s role as regional trading/refining hub severely affected
• Estimated price spike: $20-30/barrel during active conflict
• Insurance and shipping costs would surge

Scenario 4: Expanded Resource Nationalism

Approach: Broader pattern of resource control/seizure by major powers

Likelihood: MEDIUM-HIGH (50-60%)

Trend Indicators:

• Trump administration rhetoric emphasizing resource access
• Explicit statements about “taking back” Venezuelan oil
• China securing long-term resource deals globally
• Russia leveraging energy as geopolitical weapon
• Breakdown of post-WWII international trade norms

Singapore Impact:

• STRATEGIC CONCERN – Small states vulnerable in resource nationalism era
• Singapore’s free trade/rules-based system advantages eroded
• Potential discrimination against neutral trading hubs
• Need to secure bilateral energy agreements becomes urgent
• Regional suppliers (Malaysia, Indonesia) may prioritize domestic needs

Singapore-Specific Vulnerabilities

Energy Security Profile

Current Dependencies:

• 95% of electricity from natural gas (imported)
• 100% import dependency for all energy
• Zero domestic oil/gas reserves
• Major oil refining and trading hub despite no production

Import Sources:

• Natural gas: Pipeline from Malaysia/Indonesia + LNG imports
• Oil products: Middle East (major source), regional suppliers
• Electricity imports: Beginning (Laos via Thailand/Malaysia)

Strategic Assets:

• 3rd largest global oil trading hub
• Major refining capacity
• Critical shipping/logistics infrastructure
• Storage facilities

Risk Matrix for Singapore

HIGH RISK:

1. Strait of Hormuz Closure (even temporary)
   • Immediate supply disruption
   • Price spikes affecting economy-wide costs
   • Refineries face feedstock shortages
2. U.S.-China Energy Decoupling
   • Singapore caught in sanctions crossfire
   • Trading operations face compliance conflicts
   • Choose sides between major partners pressure
3. Regional Supply Interruptions
   • Malaysian/Indonesian domestic prioritization
   • Pipeline infrastructure sabotage/accidents
   • Political tensions affecting energy cooperation

MEDIUM RISK:

1. Global Price Volatility
   • Resource nationalism driving price instability
   • Impact on inflation and economic competitiveness
   • Refining margins affected
2. Secondary Sanctions Exposure
   • Trading Iranian/Venezuelan/Russian oil
   • Financial institutions at risk
   • Shipping companies facing restrictions

LOW RISK:

1. Direct Military Threat
   • Singapore not primary target in resource conflicts
   • Regional stability generally maintained

Outlook & Probability Assessment

Will Resource-Focused Foreign Policy Succeed?

Overall Assessment: MIXED OUTCOMES LIKELY

Limited Success Probable (60% likelihood):

• U.S. will maintain domestic production dominance
• Some pressure on adversaries (but not zero exports)
• Energy used as diplomatic lever with varying effectiveness
• Precedent set for more transactional approach to resources

Complete Failure Scenarios (25% likelihood):

• Market forces override political goals
• International resistance prevents unilateral action
• Costs (military, economic, diplomatic) exceed benefits
• China and others develop alternative systems

Major Escalation Scenarios (15% likelihood):

• Military conflict disrupting global supplies
• Breakdown of international trading system
• Energy weaponization triggering broader conflicts

Key Variables to Monitor

1. China’s Response
   • Most critical factor given trade volumes
   • Ability/willingness to circumvent sanctions
   • Development of alternative payment systems
2. OPEC+ Production Decisions
   • Spare capacity utilization
   • Willingness to compensate for sanctioned barrels
   • Saudi Arabia’s balancing act between U.S. and China
3. Iran’s Strategic Choices
   • Nuclear program advancement
   • Regional proxy activities
   • Strait of Hormuz rhetoric vs. action
4. Global Economic Conditions
   • Demand destruction from high prices
   • Recession risks reducing oil consumption
   • Emerging markets’ ability to absorb costs
5. Technology Disruption
   • EV adoption rates (especially China: 50% of new sales)
   • Renewable energy deployment
   • LNG as transition fuel

Recommendations for Singapore

Immediate Actions (0-12 months)

1. Diversify Energy Sources
   • Accelerate regional electricity import agreements
   • Expand LNG import terminal capacity
   • Increase storage capacity for emergency reserves
2. Strengthen Regional Partnerships
   • Deepen ASEAN energy cooperation frameworks
   • Bilateral agreements with multiple suppliers
   • Technical cooperation on pipeline security
3. Enhance Strategic Reserves
   • Evaluate adequacy of current reserves
   • Consider expanding beyond current levels
   • Coordinate with regional partners on shared reserves
4. Risk Management for Trading/Refining
   • Implement robust sanctions compliance systems
   • Diversify client base away from high-risk jurisdictions
   • Develop contingency plans for supply disruptions

Medium-Term Strategy (1-3 years)

1. Accelerate Energy Transition
   • Rapid solar deployment to 2030 targets (2 GWp)
   • Hydrogen/ammonia infrastructure development
   • Regional clean energy grid participation
2. Develop Alternative Routes
   • Australia-Asia Power Link (1.75 GW target)
   • Indonesian renewable energy imports
   • Multiple LNG sourcing agreements
3. Financial Preparedness
   • Budget planning for higher energy costs
   • Hedging strategies for price volatility
   • Support for vulnerable sectors/populations
4. Diplomatic Positioning
   • Maintain neutrality where possible
   • Active participation in international energy governance
   • Avoid taking sides in U.S.-China energy disputes

Long-Term Vision (3-10 years)

1. Energy Independence Goal
   • 40% clean energy mix by 2035 (current target)
   • Hydrogen economy development for 50% of power by 2050
   • Regional leadership in energy transition technologies
2. Transform Trading Model
   • Position as clean energy trading hub
   • Carbon markets and green finance leadership
   • LNG bunkering hub development
3. Technology Leadership
   • Energy storage innovation
   • Smart grid technology exports
   • Maritime decarbonization solutions

Conclusion

The current trajectory of U.S. energy policy, combined with rising resource nationalism globally, creates a more volatile and unpredictable environment for energy importers like Singapore. While complete success of aggressive resource acquisition strategies is unlikely, the risks of supply disruptions, price volatility, and being caught in great power competition have materially increased.

Singapore’s vulnerabilities are significant but manageable through proactive diversification, regional cooperation, and accelerated energy transition. The 2025-2030 period represents a critical window for reducing dependencies and building resilience before potential escalation scenarios become more probable.

Key Takeaway: Singapore should prepare for a world where energy is increasingly weaponized in geopolitical competition, while maintaining pragmatic relationships with all major powers and accelerating the transition away from fossil fuel dependency.

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Risk Assessment Confidence Levels:

• High confidence: ASEAN regional dynamics, Singapore vulnerabilities
• Medium confidence: U.S. policy outcomes, market responses
• Low confidence: Specific timing of geopolitical events, military escalation scenarios

Last Updated: January 2026