Quick judgments are needed to cope with extreme price changes and flurry of client requests

[SINGAPORE] Singapore’s energy-sector professionals are in crisis management mode, as the Middle East war throws up wild price swings, cargo disruptions and legal conundrums.

“We are seeing a perfect storm of disruption across the trading chain,” said Baldev Bhinder, managing director at Blackstone & Gold, a disputes law firm specialising in commodities and trade.

Traders, lawyers and analysts The Business Times spoke with said that they were making rapid judgment calls despite information gaps, all while managing stress in an increasingly volatile environment.

Brent crude prices remained above US$100 per barrel as at 6 pm on Tuesday (Mar 24), even after US President Donald Trump added a five-day delay to his demand for Iran to reopen the Strait of Hormuz or face bombing of its power grid.

Prices of oil and its derivatives have been erratic, hampering traders’ ability to provide quotations.

For instance, fuel oil prices are “hard to quote because (they’re) only valid for one to two seconds with the great volatility”, said a Singapore-based oil broker.

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The commodity’s flat prices – which exclude factors such as freight and timing adjustments – used to move in increments of about US$0.25 per metric tonne, but they can now swing by a few dollars within seconds, said the broker, who declined to be named.

Sales traders like Oriano Lizza of trading platform CMC Markets Singapore are fielding queries from clients on the unusual price movements.

“When a market is obviously stressed like this, you might have instances where pricing is very skewed, or spreads are very wide,” said Lizza, who helps institutional clients execute trades across asset classes, including oil and other commodities.

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While volatility means an uptick in trading volumes, “we also need to be able to manage our risk internally”, he told BT over a call.

Staying “grounded and balanced” is critical when dealing with anxious clients. He said: “If I’m panicked and not level myself, I’m probably going to encourage more panic on you… and then it’s a huge mess.”

No “luxury” of perfect information

Energy lawyers are meanwhile dealing with a flurry of client requests for advice – especially with recent force majeure notices, which seek to excuse parties from obligations under unforeseen circumstances such as war.

There has been a high volume of requests for advice on interpreting contracts, said Tam Shu Ching, a senior associate with Herbert Smith Freehills Kramer in Singapore.

“Clients are focused on understanding their legal rights, issuing protective notices to preserve claims, and positioning themselves for disputes that may follow,” she said.

Another Singapore-based lawyer highlighted the “striking” speed at which geopolitical events create legal risk.

“In some cases, the time frame is days and weeks. But in many instances, we are talking about a matter of hours,” added the lawyer, who declined to be named.

Speed and a clear-eyed approach are vital, noted Bhinder of Blackstone & Gold.

“Sometimes you don’t have the luxury of perfect information, so a judgment call has to be made with the client on the spot,” he said. As crisis situations require senior partner input, he also takes calls “at any time”.

Staying healthy, with an occasional beer

Dealing with such pressure is par for the course in legal circles; as Bhinder mused, “pain thresholds are always higher” for those who choose the profession.

The job is “mentally demanding” because clients are under real pressure, with immediate and material consequences.

Having handled disputes for over two decades – including port closures during Covid-19 – he noted that “no amount of legal theory will prepare you for the countless permutations that happen in real life”.

That said, “the challenge of the work is also its greatest source of fulfilment”, he added.

For traders, maintaining composure is essential. Lizza said he relies on routine – exercise, diet and the occasional post-work beer – to keep calm. “You need to have some element of stability, because tomorrow could be something completely different.”

Mental burden

Grappling with the human toll of war is another challenge.

Commodity markets “can go quiet” for very long periods of time without much volatility, Lizza noted. But with major shocks, the knock-on effect “goes straight to the level that hurts you and (me)”.

The depth of the crisis weighs on Sparta Commodities’ senior oil analyst June Goh, who has shared regular social media posts explaining the impact of the war.

“The crisis continues to unfold with drastic consequences to our society and we are only at the tip of the iceberg,” she told BT, adding that she can only do her part to share what the crisis means to the general public.

“It pains me to see things ahead of the curve and the burden is real,” she said.

With additional reporting by Jude Chan

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