29/03/2026

NATIONAL 3 theSun on Sunday MAR 29, 2026

Hormuz passage secures supply, not market shift

Disruptions keep oil prices elevated PETALING JAYA: Oil prices are set to remain elevated as tensions in the Middle East continue to threaten supply, with disruptions at the Strait of Hormuz, one of the world’s most critical oil chokepoints, keeping markets on edge. Economist Dr Geoffrey Williams said while higher insurance premiums due to the conflict have contributed to increased shipping costs, their overall impact on oil prices remains relatively small compared with broader concerns over supply security and refinery disruptions. “Prices are likely to stay high as long as the conflict persists and the strategic waterway remains constrained. “Although the market appears to be stabilising, with crude prices holding above US$100 per barrel (RM400) without further sharp spikes.” Williams said this suggests that investors are anticipating a possible de-escalation in hostilities, with attention shifting towards efforts to reopen the critical route, which could eventually ease cost pressures and bring prices down. “The market is now seeing some signs that the uncertainty is easing. Although the Strait of Hormuz remains affected by disruptions, the market has already priced in the risk,” he said, adding that oil prices have stayed stable at around US$100 per barrel. He said while the situation remains tense, it is not escalating further and may be showing early signs of stabilisation, with some indications of a gradual move towards de-escalation. Taylor’s University research cluster lead for innovative management practices Prof Dr Poon Wai Ching echoed similar views, saying rising insurance premiums are only one of several factors supporting higher oil prices, but not the main driver. She said oil and gas prices are being supported by a “stack of overlapping factors”, including geopolitical risks, higher logistics and insurance costs, supply restrictions by the Organisation of the Petroleum Exporting Countries and its allies (Opec+) and resilient global demand. “Even if some physical flows resume, such as through safe passage arrangements, financial and risk premiums remain elevated, keeping prices high,” she said. Poon added that the current market is not driven by a single factor, but a layered pricing effect where multiple pressures reinforce each other. “Geopolitical risk adds a fear premium, logistics and insurance raise transport costs, Opec+ limits supply and strong demand prevents prices from falling,” she said. She added that even with partial improvements in access through the Strait of Hormuz, broader market pressures continue to keep prices elevated. A Euronews report said shipping through the Strait of Hormuz is increasingly shaped by rising risks and costs as regional tensions disrupt normal transit. – by Qirana Nabilla Mohd Rashidi

Economists say move reassures trade flows but leaves global crude supply dynamics unchanged Ű BY QIRANA NABILLA MOHD RASHIDI newsdesk@thesundaily.com

formal workers nationwide. Socso has also signed a memorandum of understanding with the Armed Forces Ex-Servicemen Affairs Corporation and the Veterans Affairs Department to create an integrated ecosystem for Malaysian Armed Forces veterans, targeting 5,000 job placements through the MYFutureJobs Wira Career Protection Programme by 2030. – Bernama could position itself as a relatively reliable conduit or facilitator for oil trade within Asean, potentially supporting neighbouring countries facing logistical or security constraints. “Even so, this role would be incremental rather than transformative,” she said, adding that the move enhances Malaysia’s resilience and may offer modest regional benefits but does not materially reshape global oil flows or pricing. Meanwhile, Universiti Teknologi Mara economist Dr Mohamad Idham Md Razak said securing safe passage helps Malaysia avoid major disruptions in oil and trade shipments. He said this would ensure smoother supply chains and prevent sudden spikes in transport and import costs. “However, the development is unlikely to significantly lower inflation in the next three to six months, though it plays an important role in containing further increases, particularly those driven by energy-related cost pressures. “There may be a modest stabilising effect on the ringgit, as reduced uncertainty over import flows improves market sentiment, although global interest rates and investor behaviour remain key factors.” Mohamad Idham added that the government may gain some breathing space in managing fuel subsidies, as smoother supply reduces the risk of sudden cost surges, although fiscal pressure remains if global oil prices stay elevated. He emphasised that if oil prices remain high globally, the relief for Malaysia would be only partial as pricing is determined by international markets rather than supply access alone. “For consumers, the benefits are likely to be gradual rather than immediate, as businesses tend to adjust prices slowly due to existing cost structures.” He added that the transport and logistics sectors are likely to benefit first from more stable fuel supply and costs, with downstream effects gradually seen in food distribution and some retail segments. Mohamad Idham cautioned that the advantage is not fully secure in the long term, as it depends on the evolving geopolitical situation, and any escalation could quickly reverse the current stability. “Overall, this should be seen as a short-term stabiliser that reduces risk and uncertainty, rather than a structural shift in Malaysia’s economic outlook.”

Strait of Hormuz still offers reassurance for the country’s energy security and trade continuity.” She said in practical terms, this means Malaysia is less likely to face fuel supply disruptions that could affect other countries in the region if tensions escalate further. “That stability alone is valuable, given the strait’s role as a critical global oil chokepoint.” However, she said the arrangement is unlikely to significantly influence oil prices or alter supply dynamics in a meaningful way. Poon added that the scale of Malaysia’s oil trade and shipping activity, while important at a regional level, is not large enough to influence broader market sentiment or offset volatility driven by major producers and geopolitical developments in the Middle East. “Where the announcement may carry slightly more weight is at the regional level. By ensuring safe transit, Malaysia

PETALING JAYA: Malaysia’s securing of safe passage for its vessels through the Strait of Hormuz should be viewed as a stabilising measure for the economy rather than a game-changing shift in global oil dynamics, said economists. This follows Prime Minister Datuk Seri Anwar Ibrahim’s announcement on Thursday thanking Iranian President Masoud Pezeshkian for facilitating early transit arrangements and ongoing efforts to secure the release of Malaysian oil tankers and crew members. Taylor’s University research cluster lead for innovative management practices Prof Dr Poon Wai Ching said the development, while positive, should not be overstated. “Its broader impact, particularly on global oil markets, is likely to remain limited. However, Malaysia’s securing of safe passage for its vessels through the

WARM WELCOME ... Prime Minister Datuk Seri Anwar Ibrahim being greeted by Indonesian President Prabowo Subianto during his visit to Jakarta, Indonesia. – PIC COURTESY OF ANWAR IBRAHIM’S FACEBOOK

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