Developments in the Strait of Hormuz also mean trouble for the world’s supply of seaborne oil and gas.
“Iran has now significantly disrupted that supply. There is a global market in oil. So when prices rise in one place due to supply shortages, prices will rise everywhere because people will want to sell to the person who pays the most,” he said.
He added that there are no signs that Iran will stop its effective closure of the strait.
Iran has also said that if there is any permanent peace agreement, it must be allowed to impose transit fees on all ships passing through the waterway.
“All these have significant consequences for Singapore,” he said.
“We are a small and very open economy. We import nearly all our energy. Fuel and electricity costs will go up, because everything depends on fuel and energy, and therefore pretty much everything will be affected. But at least the lights are on.
“You have seen in other countries, some other countries, rationing has started. We do not know how long these disruptions will last,” he said.
Mr Shanmugam said that even if the strait were to fully reopen tomorrow, it would take time to repair the damaged oil infrastructure across the Middle East. Some measurements are that it will take years, he added.