Published: 12 March 2026 • Day 13 of Active Conflict
Scope: Geopolitical Analysis | Energy Economics | Singapore Macroeconomics
Executive Summary
On 28 February 2026, the United States and Israel launched coordinated military strikes on Iran’s nuclear and military infrastructure, triggering the most acute Middle East crisis in a generation. As of Day 13, the conflict has killed at least 1,348 Iranian civilians, displaced hundreds of thousands across the region, and — critically — halted nearly all maritime traffic through the Strait of Hormuz, through which approximately one-fifth of the world’s traded oil and a quarter of global LNG flows.
This case study analyses the conflict’s origins, its current trajectory, and three intersecting dimensions of consequence: the global energy market shock, the evolving geopolitical outlook, and — with particular depth — the specific risks and policy responses confronting Singapore, a city-state with no domestic energy production, one of Asia’s largest oil refining complexes, and deep structural exposure to the disrupted supply corridor.
| KEY STAT | 20–21 million barrels of oil per day transited the Strait of Hormuz before the closure — roughly 20% of all globally traded petroleum. |
Part I: Case Study — Origins and Conduct of the Conflict
1.1 Background and Immediate Trigger
The February 2026 strikes did not emerge without warning. A 12-day air conflict in June 2025 saw Israel strike Iranian military infrastructure and the United States target Iranian nuclear facilities. That episode ended without a Hormuz closure but left both sides in an intensified posture of mutual deterrence. Failed nuclear negotiations in Geneva between mid-2025 and early 2026 prevented any diplomatic re-set.
On 28 February 2026, US and Israeli forces launched ‘Operation Epic Fury,’ a coordinated campaign targeting military command nodes, nuclear-related sites, and senior leadership. Supreme Leader Ali Khamenei was killed in the initial strikes. The strategic premise — that decapitating the leadership would precipitate rapid government collapse — has not been validated. Mojtaba Khamenei was swiftly designated as successor, with the IRGC and clerical establishment pledging loyalty.
1.2 Chronology of Key Events (28 Feb – 12 March 2026)
| Date | Event | Significance |
|---|---|---|
| 28 Feb | US–Israel launch Operation Epic Fury; Khamenei killed | Conflict begins; strategic premise of regime collapse set |
| 1–2 Mar | IRGC announces Strait of Hormuz closure; tanker traffic plummets 70% | Energy shock begins; $100/bbl oil threshold approaches |
| 3–4 Mar | Iran strikes Gulf states; Bahrain, UAE, Kuwait targeted; STI falls 1.5% | Regional spillover; markets react globally |
| 5 Mar | Iran narrows closure: only US/Israeli/Western-linked vessels | Limited diplomatic signal; most traffic still halted |
| 7–9 Mar | Hezbollah re-engages; Israeli strikes on Beirut resume; Lebanon toll exceeds 630 | Multi-front conflict widens |
| 10 Mar | US intelligence confirms Iran mining Strait of Hormuz | Closure risk becomes structural, not just operational |
| 11 Mar | UAE intercepted 6 ballistic missiles, 7 cruise missiles, 39 drones in single wave | Largest single-day Gulf interception on record |
| 12 Mar (Day 13) | Death toll: 1,348 in Iran; 630+ in Lebanon; US war costs exceed $11.3bn | Conflict costs escalate; no ceasefire in sight |
1.3 Military Postures and Proxy Dynamics
The conflict has rapidly assumed a multi-front character. Israel is conducting large-scale strikes on Hezbollah infrastructure in Beirut’s Dahiyeh district while managing inbound missiles from Iran. The IRGC has widened its retaliatory target map to nine countries across the Gulf. Iran and Hezbollah conducted a joint missile operation against Israeli territory on Day 13. In Iraq, two oil tankers were attacked off the coast with at least one crew fatality.
- Iran: Pursuing asymmetric escalation — missile salvos against Gulf energy infrastructure, maritime interdiction in Hormuz, cyberattacks (e.g., 50TB stolen from Stryker medical systems), and proxy activation.
- United States: Conducting offensive strikes while managing war costs ($11.3bn in six days). Trump has declared ‘we’ve won’ while the conflict continues to expand.
- Israel: No stated timeline for operations; Defence Minister Katz confirmed the campaign will continue ‘without any time limit.’
- Hezbollah: Re-engaged following the Minab school strike, which killed more than 170 people, mostly children.
1.4 Humanitarian Dimension
The humanitarian toll is severe and underreported. UNICEF has characterised the situation in Iran as ‘catastrophic,’ with more than 1,100 children killed or injured. In Lebanon, over 800,000 people have been registered as displaced. The targeting of a school in Minab — attributed by The New York Times to a US Tomahawk targeting error — has become a focal point of international condemnation and has precipitated significant retaliatory cyber and military action.
| HUMANITARIAN NOTE | The UN Security Council adopted a resolution urging Iran to halt attacks on Gulf states — notably without referencing the original US–Israeli strikes on Iran. |
Part II: Outlook — Scenarios and Structural Risks
2.1 Geopolitical Outlook
No credible off-ramp exists as of Day 13. Iran has set three conditions for peace — recognition of its ‘legitimate rights,’ payment of reparations, and binding international guarantees against future attacks. The US and Israel have not engaged these terms. Trump’s posture oscillates between claiming victory and threatening further escalation, while the IRGC has threatened $200/barrel oil and vowed ‘not a litre’ of oil through Hormuz.
Three scenarios are analytically useful:
| Scenario | Key Assumptions | Oil Price Projection |
|---|---|---|
| Base Case (30%): Negotiated pause within 3–4 weeks | Diplomacy (Qatar/Oman channel) produces ceasefire; Hormuz partially reopens; no Saudi/UAE infrastructure hit | Brent settles US$78–90; normalises over 6–8 weeks |
| Adverse Case (45%): Prolonged conflict, 2–3 months | Hormuz remains functionally closed; Gulf states sustain energy infrastructure damage; Iran mines persist | Brent US$100–120; Asian inflation +1–2 pp; global recession risk rises |
| Severe Case (25%): Regional war, Saudi Arabia drawn in | Saudi Aramco infrastructure struck; Houthis resume Red Sea attacks; full Gulf production disruption | Brent US$120–200+; global stagflation; demand destruction; US recession likely |
2.2 Global Energy Markets
The IEA has characterised the disruption as the ‘largest supply disruption in the history of the global oil market.’ Approximately 170 containerships were trapped inside the strait as of 1 March 2026 with no safe exit. Alternative routing via the Cape of Good Hope adds 10–15 days to Asia-bound voyages, raising freight and insurance costs substantially. The London insurance market has designated waters around Oman as a high-risk zone, extending the effective disruption beyond the strait itself.
- Oil: Brent rose from ~US$73 pre-conflict to above US$100 intra-day, with IRGC threatening $200/bbl.
- LNG: US natural gas futures up more than 20% since strikes began. One-fifth of global LNG transits Hormuz.
- Fertiliser: One-third of global fertiliser trade transits the strait; urea prices surged from $475 to $680/metric ton.
- Petrochemicals: ~85% of Middle Eastern polyethylene exports pass through Hormuz, affecting global plastics supply chains.
- Emergency release: IEA authorised the largest coordinated release in history — 400 million barrels — including 172 million from the US SPR. Markets remain elevated.
2.3 Geopolitical Structural Risks
Several structural risks extend beyond the immediate military confrontation:
- Maritime law erosion: Iran’s declared right to veto commercial passage through an international strait — if normalised — would represent a fundamental challenge to the UN Convention on the Law of the Sea.
- Gulf state cohesion: Bahraini espionage arrests (four citizens charged with spying for IRGC) signal the conflict’s domestic security dimensions within Gulf states.
- Nuclear non-proliferation: Saudi Arabia and other states may intensify nuclear capability discussions if Iran’s programme is damaged but not eliminated.
- Southeast Asian neutrality: ASEAN states face intense pressure to avoid alignment; Singapore’s role as a financial and logistics hub adds particular complexity.
- US fiscal strain: At $11.3bn in six days, the financial cost of the war is placing immediate pressure on US defence appropriations, which were not structured for sustained conflict of this scale.
Part III: Solutions — Pathways to De-escalation
3.1 Diplomatic Architecture
A functional ceasefire requires an intermediary accepted by both Iran and the US-Israel coalition. Qatar and Oman have historically served this function. The conditions for peace laid out by President Pezeshkian — recognition of Iran’s rights, reparations, and security guarantees — are demanding but not structurally incompatible with a face-saving framework for the US side, if framed as ‘mutual de-escalation commitments’ rather than concessions.
- Short-term: Humanitarian corridor establishment — suspend strikes on civilian infrastructure for 72-hour windows to allow UNICEF and Red Crescent access.
- Medium-term: Confidence-building through maritime: IRGC-IRGC-linked naval communication channels to prevent accidental escalation in Hormuz; partial reopening to neutral-flag vessels.
- Long-term: Revived multilateral nuclear framework with China and Russia as co-guarantors, providing the ‘international guarantees’ Tehran demands without a US bilateral agreement.
3.2 Energy Market Solutions
- Emergency coordination: Continue coordinated IEA strategic reserve drawdowns; expand participation to include non-IEA members India and China, who hold substantial strategic stocks.
- Alternative routing: Accelerate the certification of alternative Omani port corridors (Duqm, Sohar) for tanker transit once security conditions allow.
- Demand management: Asian importers — particularly South Korea, Japan, and Singapore — should implement demand-side conservation measures to extend reserve runways.
- Price stability measures: Targeted fuel subsidies for vulnerable consumers and industries, calibrated to avoid inflating fiscal deficits beyond sustainable levels.
3.3 Humanitarian and Legal Solutions
- UN Security Council: A broadened resolution condemning all attacks on civilian infrastructure — including the original US–Israeli strikes — would strengthen the legal basis for humanitarian access.
- War crimes accountability: The Minab school strike, if confirmed as a Tomahawk targeting error, requires an independent investigation under the laws of armed conflict. Accountability is both a moral imperative and a diplomatic tool.
- Refugee preparedness: Regional states should pre-position UNHCR-coordinated reception capacity in anticipation of Iranian civilian displacement at scale.
Part IV: Singapore’s Exposure and Strategic Response
4.1 Singapore’s Structural Vulnerabilities
Singapore’s exposure to this crisis is unusually deep across four structural dimensions:
| Vulnerability | Exposure Detail |
|---|---|
| No domestic energy production | 100% import-dependent on oil and gas; Middle East historically dominant supplier |
| Refining hub exposure | One of Asia’s top 3 oil refining centres; input supply shock threatens both throughput and export revenues |
| LNG dependence | Qatar supplied 45% of Singapore’s LNG in 2025; Hormuz closure directly severs this supply line |
| Financial and maritime hub | Singapore is a key node for ship financing, insurance, and commodity trading — all under stress from war-risk repricing |
4.2 Immediate Economic Impacts (Days 1–14)
The conflict’s first two weeks have already produced measurable shocks across Singapore’s economy:
- Equity markets: Singapore’s Straits Times Index (STI) fell 1.5% on 4 March, reflecting investor concern over energy input costs and regional instability.
- Refining margins: Input supply compression is squeezing refining throughput at the Jurong Island complex. Singapore Petroleum Company (SPC) made the strategically significant decision to hold pump prices, absorbing short-term margin pressure to prevent consumer panic.
- Shipping and insurance: War-risk insurance premiums for vessels traversing waters near the conflict zone have surged. Citibank’s decision to close most of its Gulf branches following Iranian threats to financial institutions signals contagion risk to Singapore’s financial sector, which has deep Gulf connectivity.
- LNG spot prices: With Qatar’s supply effectively halted, Singapore is exposed to sharp LNG spot price increases. US natural gas futures are up more than 20% since the strikes.
- Inflation trajectory: BMI (Fitch Solutions) estimates the conflict will add 7–27 basis points to headline CPI across Asia, with Singapore among the most exposed economies due to its high import dependence.
| INFLATION RISK | Goldman Sachs estimates that a six-week Hormuz closure with oil at $85/bbl could raise regional Asian inflation by approximately 0.7 percentage points above baseline. |
4.3 Medium-Term Risks (1–6 Months)
- Stagflation risk: Simultaneously contracting export demand (global growth slowdown) and rising domestic costs present the most difficult policy environment for MAS — tightening is needed for inflation but contraction demands stimulus.
- Supply chain disruption: Rerouting of container ships around the Cape of Good Hope adds 10–15 days to transit, increasing logistics costs for Singapore’s port operations and re-export businesses.
- Trade finance stress: Singapore banks with Gulf exposures face elevated counterparty risk. Monitoring of these portfolios by MAS should be intensified.
- Aviation: Jet fuel supply disruption (30% of Europe’s jet fuel originates from or transits Hormuz) creates cost pressures for Singapore Airlines and Changi Airport’s competitiveness as a hub.
4.4 Policy Responses
Monetary Policy (MAS)
- Maintain or mildly tighten the S$NEER policy band to lean against imported inflation from rising oil prices.
- Activate enhanced surveillance of war-risk insurance exposures within Singapore-domiciled financial institutions.
- Coordinate with MAS’s liquidity facilities to ensure stability in commodity trade finance.
Fiscal Policy
- Targeted fuel subsidies for lower-income households and energy-intensive SMEs, time-bounded and means-tested to avoid broad-based fiscal strain.
- Temporary reduction of excise duties on refined petroleum products if pump prices threaten to exceed psychologically significant thresholds.
- Accelerate utilisation of Singapore’s strategic petroleum reserves, coordinated with IEA emergency release frameworks.
Energy Diversification (Medium and Long-Term)
- Accelerate contracted volumes from Australian LNG suppliers (Australia is Singapore’s largest non-Gulf LNG source) to partially offset Qatari shortfalls.
- Fast-track the ASEAN Power Grid integration to reduce Singapore’s dependence on gas-fired generation by enabling renewable imports from regional partners.
- Expand the pipeline of offshore floating storage and regasification units (FSRUs) to build LNG buffer capacity.
- Incentivise accelerated rooftop solar deployment on industrial and commercial buildings in Jurong Island and Tuas to reduce gas demand intensity.
Diplomatic and Strategic
- Singapore should use its established credibility with both Iran and the Gulf states — built over decades of diplomatic neutrality — to support Qatari and Omani mediation efforts.
- As a major maritime hub, Singapore has strategic interest in preserving the freedom of navigation in the Strait of Hormuz as a matter of international law; this position should be clearly articulated in multilateral forums including the UN and IMO.
- Singapore’s position as a member of the G20 (as a guest/observer) and its deep connections to global financial institutions position it to advocate for coordinated emergency energy measures.
| STRATEGIC NOTE | Singapore’s historical precedent — navigating the 1973 oil embargo through fiscal restraint, strategic stockpiling, and supply diversification — provides a proven playbook that remains relevant today. |
Conclusion
The 2026 US–Israel war on Iran is not merely a regional military conflict. It is a structural shock to global energy infrastructure, international maritime law, and the supply chains that sustain Singapore’s trade-dependent economy. As of Day 13, there is no credible off-ramp, the humanitarian toll is mounting, and the Strait of Hormuz remains functionally closed for the first time in modern history.
For Singapore, the crisis crystallises a long-standing strategic vulnerability: the city-state’s prosperity is built on open, rules-based international trade — and that foundation is under direct attack. The policy response must operate simultaneously across monetary, fiscal, diplomatic, and energy diversification dimensions. Short-term stabilisation measures are necessary but insufficient; the crisis should accelerate the structural energy transformation that makes Singapore less dependent on any single chokepoint or supply corridor.
The most consequential insight from this analysis is not how Singapore manages the crisis, but whether it emerges from it having built the resilience to withstand the next one.
Sources: Al Jazeera, Wikipedia (2026 Strait of Hormuz Crisis), Fortune, CNBC, Foreign Policy, Middle East Briefing, Maxthon/Singapore Energy Analysis. Data current as of 12 March 2026.