The ongoing tension in the Middle East shows no sign of easing.
The implications?
Brent crude oil prices have climbed back above US$100 a barrel, triggering rising electricity tariffs, corporate profit margin compression, and potentially further monetary policy tightening by the Monetary Authority of Singapore (MAS).
We check out the winners and losers of this oil-driven inflation headwind.
Upstream Producers and Offshore Yards – The Winning Leaders
When oil consumers pay more, suppliers benefit.
Who are the suppliers?
For investors, RH Petrogas (SGX: T13), a small oil and gas producer with a market capitalisation of about S$142 million, may be one to watch.
In the first half of 2026 (1H2026), RH Petrogras reported net profit of US$9.8 million, as its realised oil price rose to US$86 a barrel, from US$68 in 2025.
That beats its US$3.5 million profit for the full year of 2025, although that figure was dragged down by a one-off US$12.2 million exploration write-off.
Beyond pure oil producers, offshore and marine engineering giant Seatrium Limited (SGX: 5E2) stands to benefit as higher oil prices encourage investment in offshore energy infrastructure.
Excluding one-off divestment gains from non-core assets, Seatrium’s 1H2026 core net profit grew 54% year on year to S$212 million despite its revenue increasing just 5% to S$5.62 billion, thanks to improved margin efficiencies.
Its S$13.3 billion net order book, spread across 24 major projects, gives it revenue visibility through 2033..
Costly and complex offshore energy developments used to be less attractive than traditional onshore sources.
However, the economics flipped in Seatrium’s favour as the Middle East conflict triggered a global race for oil and gas supply outside the Middle East.
As a result, Seatrium is pursuing more than S$32 billion in project opportunities over the next 24 months, about S$21 billion of which is in oil and gas.
Banks – Indirect Winners
Rising inflation, fuelled in part by higher energy costs, contributed to the US Federal Reserve (Fed) latest interest rate hikes.
This makes Singapore’s major banking trio – DBS Group Holdings (SGX: D05), Oversea-Chinese Banking Corporation (SGX: O39), and United Overseas Bank (SGX: U11) – indirect beneficiaries, as higher rates could help their net interest margins (NIMs) recover.
Even before rates started rising, the trio’s robust balance sheets, successful wealth management growth, and ambitious regional expansion had already made them investment darlings among Singapore investors.
For long-term shareholders, a recovery in NIM could support both profits and dividends.
The banks’ quarterly results, not their share prices, will show whether that recovery is happening.
S-REITs – The Smaller Losers Win
Real estate investment trusts (REITs) are leveraged businesses with relatively high costs just to keep the lights on.
Hence, REITs that simply minimise these unavoidable cost increases will likely emerge as relative winners among their peers.
On this front, CapitaLand Integrated Commercial Trust (SGX: C38U), or CICT, Mapletree Pan Asia Commercial Trust (SGX: N2IU), or MPACT, and Parkway Life Real Estate Investment Trust (SGX: C2PU) appear poised to be relative winners with their low (less than 40%) leverage and cost of debt of less than 3%.
Additionally, 78% and 77.4% of CICT’s and MPACT’s borrowings, respectively, are fixed-rate, while about 96% of Parkway Life’s interest rate exposure is hedged.
Crucially, these REITs have ways to cushion rising energy costs.
CICT has locked in energy rates for its Singapore properties until June 2027, and for most of its overseas assets until between mid-2027 and 2028.
MPACT has secured a new two-year electricity contract for its Singapore properties from 1 November 2026, with the rate fixed for the first year.
Parkway Life’s triple-net lease arrangement for Singapore hospitals means the healthcare tenants bear all the operating expenses, insulating the healthcare REIT from rising utility costs.
Singapore Airlines (SGX: C6L), or SIA – The Biggest Fuel Consumer Loses
Oil producers benefit at the expense of oil consumers.
Who are the biggest consumers of oil?
Fuel-intensive airlines like SIA, with their mounting jet fuel costs, are arguably among the biggest losers.
In the quarter ended 30 June 2026 (1QFY2026/27), SIA’s revenue rose 19.3% to a record S$5.71 billion, thanks to strong demand and rising passenger yields.
But net fuel costs jumped 78.5% to S$2.25 billion, sending operating profit down 73.8% to S$106 million.
After its share of losses from Air India, SIA swung to a net loss of S$76 million, from a S$186 million profit a year ago.
However, with a robust balance sheet anchored by S$9.1 billion in cash, S$3.24 billion in undrawn credit lines, and an exceptionally low debt-to-equity ratio of 0.65x, SIA’s finances remain on solid footing.
Notably, even as the biggest loser from rising oil prices, SIA generated about S$810 million in free cash flow (FCF) in 1QFY2026/27, giving it the financial firepower to absorb higher fuel costs for now and keep investing for the long term.
Get Smart – Focus on Winning Oil Producers and Disciplined Energy Consumers
Oil and gas producer RH Petrogas and offshore engineering specialist Seatrium are direct beneficiaries.
Indirectly, banks also win from further rate hikes triggered in part by oil-driven inflation.
For REITs, those that can effectively absorb, hedge, or pass on the energy shock to tenants rise above others that can’t.
While SIA is the biggest loser, its financial firepower should allow it to absorb higher jet fuel costs for now while sustaining its investments.
Investors should lean towards winning oil producers and disciplined energy consumers that operate with effective cost management strategies.
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Disclosure: Larry L. owns shares of DBS, OCBC and UOB, and units of CICT and Parkway Life REIT.
