Diesel prices in Singapore have witnessed a significant surge, raising concerns over potential increases in transportation and logistics costs for businesses and consumers. As of September 16, Singapore’s gasoil prices reached approximately US$210 per barrel, a substantial rise from US$111.75 per barrel on June 26. Retail diesel prices also climbed to around S$4.07 per litre by September 22, though still below the year’s peak of S$4.68.
The price hike is attributed to tighter global fuel supplies and disruptions in major oil-producing regions. Factors such as restricted shipping through the Strait of Hormuz, the ongoing Russia-Ukraine conflict, and attacks on oil infrastructure have contributed to the uncertainty in the diesel market.
Singapore’s reliance on imports and its expansive logistics and transportation networks mean that higher diesel costs could translate into increased expenses for various sectors. Freight operators, manufacturers, retailers, food businesses, and delivery services might see a rise in operating costs.
Road freight and last-mile delivery companies are expected to feel the immediate impact, as fuel constitutes a significant portion of their expenses. While some smaller businesses with limited profit margins might absorb additional costs, others could implement fuel surcharges or adjust their operations to mitigate the impact.
The ripple effect of rising logistics expenses could ultimately affect consumers through higher prices for food, retail products, and other imported goods. However, businesses might initially absorb some of these costs or reduce discounts to delay passing them on to consumers.
Despite global efforts to transition to cleaner energy, most commercial vehicles and buses in Singapore still rely heavily on diesel, leaving them vulnerable to fluctuations in international energy markets. Industry observers anticipate that diesel prices will continue to face pressure in the near term due to ongoing supply disruptions and geopolitical tensions.