13/03/2026

FRIDAY | MAR 13, 2026

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Cabinet to assess fiscal position after spike in global oil prices p

Ű BY HARITH KAMAL newsdesk@thesundaily.com

PETALING economic resilience will be under scrutiny today as the Cabinet meets to assess the nation’s fiscal position amid escalating tensions in West Asia that threaten to shake global oil markets and push up fuel costs. On Wednesday, Prime Minister Datuk Seri Anwar Ibrahim sought to reassure Malaysians that the Budi Madani RON95 subsidy would be maintained for now and that the country’s petroleum stocks are sufficient to last until May. All eyes are on whether policymakers will introduce major policy adjustments, gradually revise fuel prices or take swift measures to shield households and businesses. Analysts warn that a prolonged conflict could send shockwaves through global fuel supplies, drive up living costs and strain government finances, testing the resilience of both the economy and households. Decisions taken today could shape Malaysia’s economic trajectory for months or even years as the country navigates one of the most volatile periods in global oil markets in recent memory. Economist Prof Dr Geoffrey Williams said the conflict appears to be easing for now. He cautioned that a prolonged conflict affecting the Strait of Hormuz could further tighten global fuel supplies. “Oil markets jumped to US$120 (RM471) per barrel last Monday, although recent releases of strategic reserves may stabilise prices. “The release of 400 million barrels of reserves looks likely to stabilise rather than reduce prices because markets expect supply restrictions to continue.” He added that tensions that drag beyond two to three months could begin to weigh on Malaysia’s growth, trade and inflation. 0 Can RM1.99 be sustained? The key question for Malaysians is whether the government will maintain the current RON95 price under the subsidy framework. Despite assurances from Anwar, economists say sustaining the subsidy could pose considerable fiscal challenges if global fuel prices remain elevated. “The fiscal challenge for the government will be to keep Budi95 prices at RM1.99 amid higher market prices. “Subsidies will increase, additional demand may have to be subsidised and savings accumulated so far could be wiped out, requiring additional funding.” Williams suggested structural reforms such as a tiered petrol pricing system. “A tiered system might be RM1.99 for the first 50 litres per month, RM2.33 for the next 25 litres, RM2.63 for the following 25 litres and the full price of RM3.27 for consumption above 100 litres.” He said such a system could encourage more prudent fuel consumption while easing fiscal pressure on the government. “If the conflict drags on, the effects on growth, trade and prices will become more pronounced, requiring stronger policy responses.” 0 Bracing for price pressures Putra Business School economist Prof Ahmed Razman Abdul Latiff said Malaysia must prioritise managing government spending, monitoring inflationary pressures and preparing for potential energy supply disruptions. “Policymakers should assess the risks from fuel subsidies, track imported inflation through fuel, food and logistics, and prepare for possible supply disruptions via the Strait of Hormuz.” Ahmed Razman said several policy tools could help cushion the economic impact. “The government can maintain or temporarily restrict fuel subsidies to affected groups, adjust targeted cash assistance such as Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah for households and provide sector-specific support for industries heavily dependent on fuel, such as transport and logistics. “Coordination with monetary policy is also important because rising energy prices could influence inflation expectations.” He added that administrative measures such as price monitoring and anti-profiteering enforcement would help prevent excessive cost pass-through to consumers. JAYA: Malaysia’s

o All eyes on whether lawmakers introduce major policy adjustments, gradually revise fuel prices or take swift measures to shield households and businesses

Ahmed Razman said sustained disruption in global energy markets could quickly ripple through the domestic economy. – SYED AZAHAR SYED OSMAN/THESUN

“If the conflict involving Iran escalates, it could disrupt shipping through the Strait of Hormuz, a key passage for about one-fifth of the world’s oil. Even a partial disruption could push prices higher and trigger market volatility.” 0 Cabinet urged to act fast Mohd Yazid said the Cabinet must move quickly to strengthen logistics planning, fiscal preparedness and diplomatic coordination as global energy markets remain fragile. “The Cabinet should ensure the security of fuel, refined products and LNG logistics rather than relying solely on crude supply levels. “The government should also prepare contingency plans for the budget and fuel subsidies if oil prices rise, the ringgit weakens or transport costs surge, as these factors can quickly drive up living costs and strain government finances.” He added that Malaysia should work closely with Asean partners, Gulf oil producers, shipping partners and major Asian buyers to help maintain stability and keep key sea routes open. He warned that rising shipping and insurance costs could pose the biggest immediate risk to global supply chains. “Malaysia must also strengthen cybersecurity, trade finance and supply-chain coordination. “Geopolitical crises often disrupt payments, ports, logistics systems and market confidence long before fuel supplies are actually affected.” 0 Malaysia’s economic test begins Today’s Cabinet meeting is expected to tackle a high-stakes agenda – fiscal resilience, subsidy sustainability, energy security and inflation control. While current petroleum stocks provide a temporary buffer, analysts say policymakers may soon face difficult decisions. The decisions they make could determine whether Malaysia weathers one of the most turbulent periods in global energy markets in recent years or faces prolonged economic shockwaves.

He said while Malaysia benefits as a net exporter of crude oil and natural gas through Petronas, the country remains exposed because it relies on imports of refined petroleum products. “Global price spikes can still raise domestic fuel costs and increase subsidy burdens. “Overall economic growth may remain stable but households could feel the pressure through higher living costs and reduced purchasing power.” 0 West Asia tensions rattle oil markets Ahmed Razman warned that sustained disruption in global energy markets could quickly ripple through the domestic economy. “Sustained disruptions could increase costs across transport, logistics and food sectors, directly affecting households. Strategic subsidy and fiscal reforms will be crucial to cushion the economy.” International Islamic University Malaysia international relations expert Assoc Prof Dr Mohd Yazid Zul Kepli said from a geopolitical perspective, wider regional instability could disrupt global energy markets. “Malaysia should closely monitor the risk of the West Asia conflict expanding and disrupting global oil and gas supplies. This could push up fuel and shipping costs, increase inflation and put pressure on Malaysia’s subsidies and fiscal position.” Mohd Yazid also highlighted risks from disrupted trade routes, market uncertainty and potential security threats. He said the most immediate concerns include rising oil and gas prices, possible disruption to shipping through the Strait of Hormuz and higher freight and insurance costs. “Even without a physical shortage, the economic shock can be felt quickly through prices, trade and market sentiment. “The global oil supply outlook remains uncertain, and developments in the Gulf carry more weight than Malaysia’s domestic stockpiles.

Culture of integrity key in fight against graft: PM KUALA LUMPUR: Law enforcement alone is insufficient to combat corruption as the effort must be reinforced through a broader culture of integrity and sound governance practices, said Prime Minister Datuk Seri Anwar Ibrahim. In a post on his Facebook page, he said an integrated approach involving the public and private sectors as well as society at large is crucial to ensure that anti-corruption efforts are implemented effectively and continuously. Anwar said he had emphasised the matter in the Special Cabinet Committee on National Governance meeting which he chaired yesterday. He added that the committee had agreed to implement the Certified Integrity Officer programme as part of efforts to strengthen national governance. He said issues such as leakage of public funds and abuse of power not only undermine national governance but also affect public well-being, including public health, the environment and national integrity. “The government remains focused on strengthening the governance agenda to ensure that integrity and transparency continue to form the core of the public service in upholding the people’s trust and reinforcing confidence in national institutions.” – Bernama