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The Road to a Second War
The United States stands at the edge of its most consequential military decision since the 2003 invasion of Iraq. President Donald Trump — who campaigned on keeping America out of foreign wars — has assembled the largest concentration of US air power in the Middle East in over two decades and set a ten-day deadline for Iran to agree to a nuclear deal or face what he has ominously called a “very different path.”
This is not the first time Washington has struck Tehran in Trump’s second term. In June 2025, the US joined an Israeli military campaign against Iran — a twelve-day conflict later dubbed Operation Midnight Hammer — bombing three underground nuclear sites at Fordow, Natanz, and Isfahan. That operation was bounded by a clear objective, ended in a ceasefire without American casualties, and was broadly framed as a success. What is being contemplated now is categorically different in scope, intent, and potential consequence.
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The Military Buildup
The scale of the current US deployment is striking. Two aircraft carrier strike groups are converging on the region: the USS Abraham Lincoln, already positioned approximately 700 kilometres from the Iranian coast, and the USS Gerald R. Ford — America’s newest and most advanced carrier — speeding through the Mediterranean. Together they bring nearly 160 aircraft and a fleet of destroyers and support vessels. More than 150 US military cargo flights have delivered weapons systems and ammunition to the region in recent weeks, and dozens of additional F-35s, F-22s, and F-16s have been redeployed to the theatre.
This is not a bluff, according to officials familiar with the planning. The Trump administration does not view the deployment as leverage alone. A senior Trump adviser assessed a 90 per cent probability of military action within the coming weeks if diplomacy fails — and, as of writing, diplomacy appears to be failing.
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What Went Wrong with Diplomacy
Two rounds of indirect nuclear talks — first in Oman on February 6, then in Geneva on February 17 — have ended without resolution. The gaps are wide. Washington is demanding that Iran transfer its remaining 400 kilograms of enriched uranium, halt nuclear weapons development, constrain its ballistic missile programme, and sever support for proxy groups including Hezbollah, Hamas, and the Houthis. Tehran has refused to acknowledge several of these red lines.
US Vice President JD Vance acknowledged after the Geneva talks that while certain progress was made, the negotiations may have reached their “natural end.” Iranian Supreme Leader Ali Khamenei, for his part, issued pointed warnings during the second round of talks, stating that even the world’s strongest military “can sometimes be slapped so hard it cannot get up” — a reference presumably to Iran’s anti-ship missile capabilities and the vulnerability of American carriers.
On Wednesday, Iran and Russia announced joint naval drills in the Sea of Oman, explicitly framed as a deterrent against “unilateral action” in the region. Iran also temporarily closed parts of the Strait of Hormuz for live-fire exercises — a rare and symbolically charged act.
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The Options on the Table
According to reporting by CNN, the Washington Post, and Axios, Trump’s military planners have presented him with a menu of options ranging from targeted strikes on nuclear or missile sites to a sustained campaign potentially lasting weeks, and even scenarios targeting the Iranian leadership — including Supreme Leader Khamenei himself.
The Atlantic Council’s analysis identifies three likely strategic rationales: the strikes are meant to strengthen Trump’s negotiating hand; the administration seeks to decapitate Iran’s leadership; or the operation will be largely symbolic, responding to Trump’s “red line” warnings over the killing of thousands of anti-government protesters in January. Analysts caution that none of these objectives is clean or guaranteed. Even a degraded Iranian regime is unlikely to capitulate on its core capabilities; a decapitation attempt invites catastrophic retaliation; and symbolic strikes, given the military assets already deployed, would look underwhelming.
The Israeli government — which advocates the most maximalist scenario — is openly preparing for war within days and is pushing for simultaneous targeting of Iran’s nuclear programme, ballistic missile infrastructure, and regime leadership. Secretary of State Marco Rubio is scheduled to meet Israeli Prime Minister Netanyahu in Jerusalem on February 28 to discuss coordination.
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Iran’s Retaliatory Capacity
Iran entered this confrontation weakened by last year’s strikes and its deteriorating domestic economic situation. But weakness does not mean impotence, and analysts warn that a regime that believes it has nothing left to lose may behave in precisely the most dangerous ways.
During the 2025 twelve-day war, Iran launched 550 ballistic missiles and approximately 1,000 drones at Israeli and US targets. Around 90 per cent were intercepted, but the 50 or so that broke through caused meaningful damage. In a longer, more expansive conflict, attrition of missile defences becomes a serious concern.
More alarming is the Strait of Hormuz threat. Tehran has threatened to close the waterway if attacked, and Iran’s parliament voted in symbolic support of closure following the June 2025 bombing — though no final order was issued. The IRGC has conducted extensive drills in the strait this week, including live missile tests. BIMCO’s chief safety officer has noted that “there is no alternative route to the Strait of Hormuz,” and that all vessels — regardless of flag — would face risk if hostilities break out.
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The Domestic Constraint Nobody Is Discussing
Trump has not sought congressional authorisation for a potential war with Iran, and he has made no serious attempt to build public support for such an operation. Representatives Ro Khanna and Thomas Massie have announced they will seek to force a war powers resolution vote next week. However, some officials warn that strikes could come before that vote is scheduled — possibly as early as this coming weekend, though factors including Ramadan (which began Wednesday) and the State of the Union address on Tuesday may influence timing.
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What This Means for Singapore
Singapore’s exposure to this crisis is substantial, structural, and operates through at least five distinct channels. It is a vulnerability that stems not from geography — Singapore sits far from the Gulf — but from the architecture of its economy.
Energy
Singapore imports 100 per cent of its energy needs. In 2025, total energy imports were valued at approximately SGD 40–45 billion annually. The Port of Singapore — the world’s second-busiest by tonnage — depends on bunker fuel priced at global crude benchmarks. Changi Airport’s competitiveness is tied to aviation fuel costs. The Jurong Island petrochemical cluster, one of the largest in the world, relies on oil and gas feedstock flowing from the Gulf.
The Strait of Hormuz handles roughly 27 per cent of global seaborne crude oil and 22 per cent of global LNG trade. Even a partial or temporary disruption to traffic through this chokepoint would cascade immediately through Singapore’s cost structure. Analysts at Lombard Odier estimate that a Hormuz closure scenario could push Brent crude above USD 100 per barrel within days, triggering a 15–20 per cent oil price spike. WTI has already climbed approximately 2 per cent to around USD 66.55 per barrel on escalation news alone.
Trade and Shipping
Singapore handles over 600 million tonnes of cargo annually and is a critical transshipment hub connecting East Asia, South Asia, the Middle East, and Europe. A significant share of this trade involves Middle Eastern oil passing through the Strait of Malacca.
Heightened tensions in the Gulf are already elevating war risk insurance premiums and freight rates on tanker routes near the Persian Gulf and Hormuz. The US has issued advisories urging American-flagged vessels to avoid Iranian waters in the strait. The UK Maritime Trade Operations agency has similarly advised vessels to transit the Gulf with caution. If conflict escalates into a prolonged disruption — comparable to the 50 per cent drop in Red Sea traffic seen during the Houthi campaign — rerouting around the Cape of Good Hope would add weeks and significant cost to voyages, with direct implications for shipping volumes through Singapore’s port.
Inflation and Monetary Policy
Singapore’s Monetary Authority of Singapore (MAS) manages monetary policy through the Singapore dollar exchange rate rather than interest rates, allowing it to appreciate the SGD to dampen imported inflation. An oil price spike above USD 100 per barrel would test this mechanism under sustained pressure.
Retail inflation for electricity, transport, and food — all sensitive to energy prices — would accelerate. Core inflation could rise above 2.5 per cent, potentially triggering a tightening signal at MAS’s April 2026 monetary policy review. Singapore’s substantial foreign exchange reserves and fiscal buffers provide meaningful shock-absorption capacity, but the structural challenge remains: as long as Singapore is 100 per cent dependent on imported fossil fuels, every Middle Eastern crisis arrives directly on its balance sheet.
Financial Markets and Investor Sentiment
The Straits Times Index (STI) would likely underperform regional peers in an escalation scenario, given Singapore’s high trade-to-GDP ratio and energy exposure. Lombard Odier identifies two risk scenarios: limited US strikes without lasting disruption (a relatively contained outcome), and a major Iranian response involving prolonged Hormuz disruption, which would drive commodity prices sharply higher, trigger intense equity market volatility, and produce a broad flight to haven assets — benefiting the US dollar and gold while pressuring risk assets across Asia.
Singapore’s role as a regional financial centre means it would also feel secondary effects: capital flow volatility, rising credit spreads on regional sovereign and corporate debt, and potential disruption to trade finance if global banking counterparties withdraw from Gulf-linked transactions.
Geopolitical and Diplomatic Position
Singapore has long maintained a policy of principled equidistance in great-power conflicts, supporting international law and open sea lanes without taking sides in bilateral disputes. The US-Iran crisis places Singapore in familiar but uncomfortable territory.
The city-state is critically dependent on freedom of navigation and the rules-based international order underpinning global trade. A unilateral US military campaign against Iran — undertaken without UN authorisation or congressional approval — complicates Singapore’s longstanding position. On the other hand, an Iranian closure of the Strait of Hormuz would be equally devastating and equally contrary to the international norms Singapore champions.
Gulf states including Qatar, Saudi Arabia, and Bahrain — with which Singapore maintains significant economic ties — have been actively lobbying against a US strike, fearing regional destabilisation and the military implications of hosting US bases. Singapore will be watching their diplomatic positioning closely.
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Scenario Analysis
Base Case — Deal or Delay (50% probability): Talks resume beyond Trump’s ten-day window, with Oman or Qatar as intermediaries. Trump claims a partial diplomatic win. Oil markets stabilise. Singapore faces elevated but manageable energy import costs and minor freight rate increases.
Moderate Escalation — Limited US Strikes, No Hormuz Closure (35% probability): The US conducts strikes on nuclear and missile sites. Iran retaliates asymmetrically through proxies and limited naval harassment, but does not close Hormuz. Oil spikes 15 per cent temporarily before stabilising. Singapore faces a short-term inflationary shock, MAS responds with SGD appreciation, and the STI sees a correction of 5–8 per cent.
Severe Escalation — Prolonged Conflict and Hormuz Disruption (15% probability): A comprehensive US-Israeli campaign targeting Iranian leadership triggers Iran’s “suicidal aggression” scenario — mass missile launches, activation of proxy networks across multiple theatres, and attempted closure of the Strait of Hormuz. Brent crude spikes above USD 100 per barrel and potentially toward USD 120–130 in a prolonged closure. LNG markets seize. Singapore faces severe imported inflation, potential recession, and a major shipping disruption affecting the port’s transshipment volumes. MAS would likely convene an emergency policy review. The government’s fiscal reserves would be drawn upon for targeted relief.
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Conclusion
The conflict now taking shape in the Persian Gulf is not yet a war, but it may become one within days. For Singapore, the stakes are not abstract. The city-state’s entire economic model — built on open sea lanes, rule-based trade, and access to global energy markets — is acutely sensitive to disruption in the Strait of Hormuz. The port, the petrochemical cluster, the aviation hub, the financial centre, and the everyday cost of living are all downstream of what happens in the next ten to fifteen days.
Singapore’s institutional strengths — deep reserves, a credible MAS, fiscal prudence, and sophisticated corporate risk management — provide genuine buffers. But no buffer eliminates the underlying structural exposure. The city-state remains, as it has always been, exquisitely vulnerable to the decisions of great powers in distant waters.
What distinguishes this moment is the fog of intention surrounding Washington’s own objectives. A war with an unclear endgame, against a regime that still has the capacity to close the world’s most critical energy chokepoint, is precisely the kind of scenario Singapore’s planners have long prepared for but hoped never to see.
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Sources: The Straits Times, Washington Post, CNN, Axios, Al Jazeera, Atlantic Council, Gulf International Forum, The National, Bloomberg, Lombard Odier, Congressional Research Service, Maxthon/88ask.com analysis, Wikipedia (2026 United States–Iran crisis).