\n<\/p>\n
By Philip J. Heijmans and Audrey Wan<\/strong><\/p>\n (Bloomberg) \u2013 Singapore\u2019s top diplomat warned the economic fallout from the war in Iran could worsen and markets have yet to factor in the worst-case scenario.<\/p>\n \u201cI\u2019ve stopped trying to get into prediction markets,\u201d Foreign Affairs Minister Vivian Balakrishnan told Bloomberg Television\u2019s Avril Hong at an Investment Management Association of Singapore conference on Tuesday, referring to US President Donald Trump\u2019s latest deadline to Tehran.<\/p>\n \u201cI\u2019m quite sure the markets are not fully pricing the worst-case scenario,\u201d Balakrishnan said. \u201cHow\u2019s that for a note of soberness.\u201d<\/p>\n Markets have been whipsawed by mixed messaging on the war in Iran. Traders were cautious ahead of Trump\u2019s latest Iran deadline expiring on 8 p.m. Eastern Time.<\/p>\n Since the global conflict began in late February, global equities are down less than 6% while oil prices have soared. Even the dollar, a reliable haven in times of geopolitical uncertainty, has weakened since touching a 2026 high late last month.<\/p>\n While Balakrishnan \u2013 like many in Asia \u2013 questioned the need for US military action in Iran, he sees Washington\u2019s main regional rival, China, as not seeking to exploit the situation.<\/p>\n China has been \u201cstable, careful, deliberate \u2013 focusing on its domestic economy and not trying to take advantage of what made things worse on the global stage,\u201d he said, adding he views the moves as \u201cstrategically wise actions.\u201d<\/p>\n The effective closure of the Strait of Hormuz has disrupted a critical artery for oil and gas shipments to Asia, forcing buyers to scramble for alternative supplies and pushing prices higher. The chokepoint handles about a fifth of the world\u2019s LNG supply.<\/p>\n Governments are already warning of a more challenging outlook as higher import bills feed into inflation and growth. Singapore imports nearly all of its energy and relies on natural gas for more than 90% of its electricity generation, leaving it highly sensitive to swings in global fuel prices and supply disruptions.<\/p>\n \u201cWe\u2019re trying to be upfront with our people and tell them this is serious, this could get worse,\u201d Balakrishnan said. \u201cWe all need seat belts.\u201d<\/p>\n More stories like this are available on\u00a0bloomberg.com<\/a><\/p>\n \u00a92026 Bloomberg L.P.<\/p>\n<\/div>\n