Singapore share prices closed 1.38 percent lower on Friday as record high oil prices of more than 78 dollars a barrel weighed on sentiment amid an escalation of violence in the Middle East, dealers said. They said the spike in oil prices to record highs, and with worse likely to come, sparked fresh concerns about the impact on inflation and interest rates.
The Straits Times Index fell 33.09 points to 2,363.55 on volume of 1.09 billion shares worth 1.06 billion Singapore dollars (666.67 million US). Losers beat winners 95 to 520, with 571 stocks unchanged. "It seems like (oil) hitting 80 dollars a barrel is inevitable," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.
"We're in unchartered territory. It is a result of a confluence of a number of geo-political events in a tight market that shows healthy demand growth. Tony Nunan, the Tokyo-based manager for energy risk management at Mitsubishi Corp, said 100-dollar oil is a possibility. "I think the market has to understand that triple-digit (oil prices) are not a fantasy anymore and are definitely possible," he said.
Israeli warplanes struck at the heart of Hezbollah's power base and pounded Beirut airport again Friday after a day of relentless attacks that left about 50 people dead and ignited fears of regional war.
With Iran defying Western pressure to curb is nuclear research program, analysts fear the Israeli offensive in Lebanon could escalate and plunge the oil-rich Middle East into a wider conflict. Blue chips were flat to weaker, with oil price-sensitive Singapore Airlines falling 0.20 dollars to 12.20 dollars.
Singapore Telecommunications lost 0.02 to 2.46 and ST Engineering down 0.04 at 2.78. Singapore Press Holdings was flat at 3.98. In the banks, DBS Group Holdings fell 0.30 to 17.30 and United Overseas Bank was down 0.20 at 15.20 while Oversea-Chinese Banking Corp held steady at 6.30.