From Hormuz to the petrol pump: 5 things Malaysians need to know

2026-03-14 - 00:34

On March 11, the unsubsidised retail price of RON95 spiked RM0.60 to RM3.27 per litre, while RON97 jumped to RM3.85, but Malaysians still enjoy the subsidised BUDI95 price of RM1.99. PETALING JAYA: The news has been hard to miss. Conflict in the Middle East, threats to shipping lanes, oil prices climbing. Social media is full of warnings that Malaysians are about to get hit at the petrol pump. But before panic sets in, here is what is actually happening — and what it means for you. 1. Yes, global oil prices are rising — and the Strait of Hormuz is why The Strait of Hormuz is a narrow waterway between Iran and Oman, barely 33km wide at its narrowest point. Roughly one-fifth of the world’s traded oil passes through it every day. Strait of Hormuz. (Wikipedia pic) Even the mere threat of conflict in the region can disrupt tanker movements and cause shipping insurance and other logistics costs to spike almost instantly. Energy analyst Samirul Ariff Othman says oil markets are uniquely sensitive to risk. Samirul Ariff Othman. “Even the perception of disruption is enough to push prices higher almost immediately,” he says. Unfortunately, matters have escalated beyond mere threats. In recent days, Iranian forces have attacked multiple tankers, with the US retaliating by destroying the Islamic Republic’s mine‐laying vessels. Iran, however, is not backing down, with newly installed supreme leader Motjaba Khamenei on Thursday vowing to keep the waterway closed. As a result, oil traffic has come to a standstill, triggering major global energy concerns. Not unexpectedly, the price of Brent crude, the global benchmark for most of the world’s oil, has soared, moving from US$70 last month to US$109 on March 9. 2. Malaysia not fully insulated — but not defenceless either Many Malaysians assume that because Malaysia is an oil producer, we are somehow sheltered from global price movements. That is true, but only partially. Malaysia does produce oil and gas. But here’s the thing: oil is not priced by the country that pumps it. It is priced by global markets — a vast worldwide system of buyers, sellers and traders who set a single price that everyone, producers included, has to reckon with. “Malaysia imports certain refined petroleum products and petrochemical feedstocks to meet domestic demand,” said Samirul, referring to the processed fuels and chemical inputs that power factories and supply chains. The prices of these imports are directly affected by global market conditions. “Energy price increases also feed into broader economic costs — transportation, logistics, food production and manufacturing — all of which are sensitive to fuel prices.” In short, Malaysia is part of a global energy system, and when that system moves, we are forced to move with it. 3. Malaysians not paying more at the pump On March 11, the unsubsidised retail price of RON95 in the country spiked RM0.60 to RM3.27 per litre, while RON97 jumped to RM3.85. Malaysians, however, have been insulated. Subsidised RON95 still costs RM1.99 per litre, with the shortfall absorbed by the Madani government through its BUDI95 targeted subsidy programme. Samirul says this is not by accident as the government has chosen to shield Malaysians from the full transmission of global price shocks into domestic costs. “By moderating price volatility at the pump, policymakers aim to reduce the knock-on effects on domestic inflation and household expenditure. “The retail price reflects a fiscal judgement about cost-of-living protection,” he said. Global oil prices are rising but, for now, the is a buffer between those prices and your wallet — and it is holding. Prime Minister Anwar Ibrahim announced earlier this week that Malaysia has enough RON95 supply to last until at least May 2026, crediting Petronas for its petroleum management. 4. Petronas plays a bigger role than most people realise Beyond the subsidy mechanism, Malaysia has another layer of structural protection: Petronas. The national oil company is not just a producer. It operates across the entire petroleum value chain — from exploration and production to refining, liquefied natural gas exports, petrochemicals and international trading. That integrated structure matters when markets get volatile. “Petronas’s global presence allows it to secure supply arrangements and manage disruptions in ways that smaller or less integrated producers simply cannot,” said Samirul. This does not mean Malaysia is immune to shocks, but it does mean the country has operational depth, unlike many of its neighbours. 5. This is not just a Malaysian problem. Every country has to deal with it Malaysia is nowhere near the area of conflict. The Strait of Hormuz lies some 6,000km away, but distance, though significant, does not make us immune. Such is the nature of the global economy, and, in particular, the oil and gas industry. When the strait is threatened, prices go up in Japan, Germany, South Korea, India and Brazil, just as it does for Malaysia. Whether you run a factory in Vietnam or a petrol station in Poland, you are compelled to respond to the same global shock. This is what economists mean by an interconnected global economy: a disturbance in one part of the system reverberates quickly and automatically worldwide. According to Samirul, the real protection does not come from being insulated. It is in having the institutions, planning and policy tools to manage the hit. For now, Malaysia has them all. “Malaysia cannot isolate itself entirely from geopolitical developments that shape oil markets. “But institutions like Petronas and government subsidy programmes do create a buffer that moderates the impact of global turbulence,” he said.