Market experts say that as US tariffs roil global trade, Singapore can leverage its status as Asia's oil trading hub to turn price fluctuations into opportunities, help businesses navigate the turbulence, and at the same time ensure its supply advantages and optimize its strategies.

Sam Chua, head of consulting for the Asia-Pacific region at Rystad Energy, told The Business Times, "In this evolving landscape, arbitrage opportunities (the practice of taking advantage of price differences in two or more markets) are likely to expand as refiners and traders seek to profit from changing price differentials."

He added, "As a regional trading hub, participants in Singapore can see opportunities to capitalize on these market fluctuations through arbitrage, optimize trading strategies, and secure a competitive supply edge amidst the dynamic changes in crude oil prices."

Rystad Energy said that US tariffs are expected to impact crude oil exports from Canada and Mexico by about 4.7 million barrels per day, forcing producers to look for alternative markets, but viable options may be limited.

Mr. Chua explained that given the dependence of US refiners on heavy crude oil from Canada and Mexico, their search for alternative suppliers, including those in the Middle East, could drive up the premium for Asian crude oil, intensifying competition for heavy crude oil in major refining centers.

Opportunities in Turbulence

On February 1, US President Donald Trump ordered a 25% tariff on Mexican energy imports and a 10% tariff on Canadian energy products, at a time when the market was still digesting his inauguration pledge to boost US oil production.

The tariffs were later postponed by a month as the neighboring countries agreed to strengthen border controls.

As the trade war intensifies, experts expect disruptions to the supply chain, but Singapore may be able to offset some of the pressure by leveraging its robust infrastructure and strategic location to help businesses adapt to the impact of the tariff shock.

Sanjeev Gupta, EY's Asia-Pacific oil and gas leader, emphasized that tariffs can create intermediary prospects for Singapore as the country can facilitate regional trade.

He said, "Given Singapore's strategic position as a entrepôt and transshipment hub, where goods are imported, processed, and then exported as value-added products, industry players here will benefit from the opportunity to take advantage of different tariffs."

He added that the republic's financial sector can also assist with trade financing and risk management, especially in the current volatile macroeconomic environment.

But that doesn't mean there won't be challenges. Lim Boon Ping, an infrastructure advisor at KPMG Singapore, acknowledged that tariff-related uncertainties could disrupt global supply chains, exposing Singapore, a key intermediary in the energy market, to market volatility.

"For example, tariff-related uncertainties could lead to higher feedstock prices for domestic refineries, increasing the pressure on energy costs for end-users," he pointed out. Lim added that changes in trade flows could reshape Singapore's trade relations in the short and long term.

Lee Chock Wai, head of equity research at Morningstar, noted that a drop in oil prices could stimulate global demand and increase the demand for Singapore's port services and refining capacity. But he warned that if oil prices stay too low for an extended period, it could dampen investment and hinder the growth of the energy sector.

Too Much Gas, Too Little Clarity

Paul Everingham, CEO of the Asia Natural Gas and Energy Association (Angea), said that Trump's policy of increasing US natural gas exports to Asia could also boost Singapore's status as a liquefied natural gas (LNG) trading hub.

EY's Gupta said that as Trump aims to increase domestic fossil fuel production, the resulting oversupply could drive down oil and gas prices, which would benefit Singapore as an energy trading hub and a natural gas consumer.

Baldev Bhinder, managing director of law firm Blackstone & Gold, emphasized that the question remains: Are Trump's tariffs just a political ploy to get countries to the negotiating table, or a more lasting measure that will transform supply chains?

He added, "In the long run, a trade war will inevitably lead to a slowdown in global economic growth and a reduction in trade, which will have an impact on trade-dependent countries like Singapore."

In response to an inquiry from BT, the Singapore Enterprise Development Agency and the Economic Development Board said in a joint statement, "It is too early to determine the direct impact of the US policy changes on specific sectors in Singapore, including the energy sector."

Both agencies noted that the Singapore government has been actively monitoring the ongoing changes and has existing measures in place to help businesses cope with the uncertainties.

Possible Route Changes

Canada and Mexico supply about a quarter of the oil to US refiners, and the threat of tariffs on energy imports from Canada and Mexico is unlikely to directly affect Singapore's oil trade. As Everingham of Angea pointed out, Singapore's refineries do not have the capacity to process the heavy crude oil from Canada's oil sands, which account for the majority of US imports from Canada.

"Even if Singapore could process heavy crude oil, the distance from Canada would be a major obstacle. At the same time, Singapore currently imports light crude oil mainly from the Middle East and will not be affected," he pointed out.

He said that if the tariffs are implemented, seaborne oil imports from Canada and Mexico to the US will be rerouted to other markets, and the US will replace the supply with crude oil from the Organization of the Petroleum Exporting Countries and Latin America, as well as refined oil products from Europe.

This will have a minimal impact on Singapore. However, if the US changes its sources of crude oil, there is a slim possibility that more heavy crude oil could be transported through Singapore's trading hub. "But this is just a small opportunity and is far from certain," he added.