THE Government has warned that global energy markets are facing prolonged instability, with crude oil prices surging above US$130 a barrel amid escalating geopolitical tensions in West Asia, prompting urgent policy interventions to shield households, stabilise supply chains and contain rising fiscal pressure.
Minister of Economy Akmal Nasrullah Mohd Nasir said the current situation is no longer a short-term shock but a structural and sustained risk to global energy security, requiring Malaysia to balance immediate relief measures with long-term resilience planning.
He said ongoing uncertainty in key shipping routes, including the Strait of Hormuz, has been exacerbated by failed peace negotiations, maritime restrictions linked to Iran and continued geopolitical volatility, even after a brief ceasefire earlier in April.
While Brent crude briefly eased to around US$99.36 per barrel following the ceasefire announcement, he said prices have since surged again to about US$132.5 per barrel, underscoring the risk of further spikes.
He also warned that even if oil prices fluctuate, higher freight and insurance costs—driven by nearly doubled shipping charges and insurance premiums that have risen as much as 16-fold on some routes—will continue to keep inflationary pressures elevated across global supply chains.
“These structural cost increases will eventually be transmitted into fuel prices, production inputs and ultimately the cost of living,” he said at the Global Energy Crisis Briefing today.
Despite external headwinds, he said, Malaysia remains relatively resilient, supported by domestic demand and stable macroeconomic fundamentals, with Bank Negara Malaysia projecting growth of between 4% and 5% in 2026, and the World Bank raising its forecast to 4.4%.
He stressed, however, that the government’s approach must remain balanced. “This means our message to the public must be balanced. The fundamentals of the economy remain strong, but external risks are increasing. We cannot be too comfortable, and we also cannot be overly anxious,” he added.
The minister said the government is monitoring 107 indicators, including 61 high-frequency data sets, to track early signs of stress across sectors, noting that households remain the most vulnerable to fuel price shocks.
He pointed to emerging impacts in aviation and tourism, including 55 weekly flight cancellations involving six airlines and an estimated reduction of 1.5 million air passengers from West Asia in 2026, with broader labour market effects expected to surface from the second quarter of the year if the conflict persists.
On food security, he said supplies remain stable, with sufficient stock across key staples including rice, poultry, eggs, vegetables, fish, milk and fruit, but warned that rising input costs are beginning to pressure producers.
Diesel, fertiliser and animal feed account for about 40% of agricultural inputs, with fertiliser prices expected to rise between 15% and 20% and feed costs by around 8%, while 63% of fertiliser is imported.
“The government must be honest that pressures are increasing at the production cost level,” he said, adding that early intervention is needed to prevent cost increases from being passed on to consumers.
He said immediate measures include tighter monitoring of essential supplies, continued support for logistics and transport sectors, and coordination with Petronas to ensure fuel shipments arrive as scheduled, with current supply projected to last only until end-May.
To cushion households and producers, the government has announced expanded targeted assistance and greater enforcement through Ops Tiris 4.0 to curb smuggling, hoarding and leakage of controlled fuels.
Looking ahead, he said the crisis underscores the urgency of reducing dependence on imported fossil fuels and accelerating Malaysia’s energy transition, including expanding biodiesel use.
He said the National Economic Action Council has agreed that biodiesel is the most practical near-term alternative fuel, given its readiness and compatibility with existing infrastructure, with Malaysia’s production capacity of 2.36 million tonnes far exceeding current output of 975,207 tonnes.
The government will raise biodiesel blending from B10 to B15, beginning with B12, without additional infrastructure costs, as part of broader plans under the 13th Malaysia Plan, including preparation for a future B30 mandate in commercial and public transport sectors. - April 14, 2026
