Malaysia ensures sufficient fuel supply and strengthens reserves as global oil prices surge, with subsidies rising to RM2 billion amid Middle East tensions

PETALING JAYA: Malaysia has activated protocols to cushion the impact of the ongoing conflict in the Middle East, including ensuring the nation’s fuel supply remains sufficient.

Efforts are underway to further strengthen fuel reserves, Finance Minister II Datuk Seri Amir Hamzah Azizan said, with national oil company Petronas and other industry players working to extend existing stock levels.

“Alhamdulillah, at this point we are seeing that supply within the country is sufficient. There are no disruptions to petrol and diesel supply in Malaysia,” he said during a press conference following a special Cabinet meeting yesterday on the economic implications following the conflict in West Asia.

Amir Hamzah attributed Malaysia’s stable supply situation to domestic oil and gas production, refinery capacity and existing storage infrastructure.

He said the government is keeping a close watch on the situation as global markets react to the geopolitical tensions affecting energy routes in the region, with West Asia remaining a critical hub for global energy supply, accounting for roughly 20% of the world’s oil and liquefied natural gas production.

Shipments of oil and other goods came to a grinding stop following the recent closure of the Strait of Hormuz.

Amir Hamzah said any prolonged disruption could affect global supply chains and push oil prices higher.

“In the past two weeks alone we have seen a sharp rise in global oil prices. Brent crude prices increased from about US$60 (RM236) per barrel to as high as US$119 (RM468.28) before stabilising around US$100  (RM393.51) per barrel,” he said, adding that Malaysia is not spared from the higher oil prices.

Previously the fuel subsidy cost the government about RM700 million, the minister said, and now it has risen to about RM2 billion.

“Diesel subsidies alone have increased to about RM1 billion.”

Amir Hamzah said the government could absorb the higher subsidy burden for now due to fiscal reforms and consolidation measures implemented over the past three years.

Still, he warned that further policy adjustments may be necessary as nobody could predict how long the conflict in the Middle East would last.

“We can sustain this (existing subsidies including for fuel) for now, but if (oil) prices remain high for a prolonged period, we may need to consider other approaches.”

The minister also said the government has adopted cost-saving steps within the public sector.

One of them is Prime Minister Datuk Seri Anwar Ibrahim’s directive advising government-linked companies and agencies to shelve Hari Raya celebrations this year.

Other considerations include allowing more work-from-home arrangements and reducing electricity consumption in offices, such as adjusting air-conditioning temperatures.

On concerns that oil prices could surge to US$200 per barrel, Amir Hamzah cautioned against any form of speculation, saying it would only benefit market speculators.

“Government agencies and oil companies are experienced in managing seasonal demand spikes, particularly during festive periods when millions of Malaysians travel across the country.

“Therefore, I am confident that fuel supply at petrol stations will remain stable even during the upcoming Hari Raya travel surge,” he said.

 The Sun Malaysia