Malaysia shielded from immediate oil shock, but conflict may raise living costs

 

MALAYSIA may be spared from the immediate economic shock of rising global oil prices caused by the conflict involving Iran, although prolonged tensions could eventually drive up the cost of living, says Sunway University Economist Yeah Kim Leng.

He added that the impact on the local economy is expected to be gradual because government fuel subsidies would initially help absorb the pressure.

In the past, increases in petrol prices often led to higher operating costs for businesses, which were eventually passed on to consumers.

“As long as RON95 petrol does not increase from its current RM1.99 per litre price, the immediate impact will remain low,” he told FMT.

Earlier this week, Prime Minister Anwar Ibrahim said the government would keep the RON95 price at RM1.99 per litre, adding that Malaysia currently has sufficient fuel supplies to sustain the subsidy until at least May.

However, Yeah cautioned that if the conflict drags on beyond that period, Malaysians may eventually face rising prices for goods and services, and possibly even higher electricity tariffs.

He pointed out that freight and insurance costs have already climbed after global benchmark Brent crude approached US$100 per barrel.

These higher costs could gradually make imports more expensive and ripple through the domestic economy.

Meanwhile, Finance Minister II Amir Hamzah Azizan said Malaysia’s supply of petrol and diesel remains stable, supported by domestic production.

According to Amir, the government is also working to secure additional reserves to strengthen energy security as geopolitical tensions in West Asia continue to unsettle global energy markets.

“Petronas and other oil companies are actively exploring alternative sources to replace supplies affected by the ongoing conflict, even as domestic fuel stocks remain stable,” he said during a post-Cabinet joint press conference.

Amir added that potential supply shortages remain the key concern, as they could trigger panic buying and sharp price increases that would directly affect households.

“For now, however, Malaysia’s supply chains remain resilient,” he said. — Focus Malaysia