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THE country is unlikely to face an immediate physical shortage of petrol despite escalating tensions in the Middle East, economists say, cautioning that proposals to restrict purchases of RON95 fuel could create more problems than they solve.
The warnings come as geopolitical tensions linked to the Iran–United States conflict raise fears of disruption along the Strait of Hormuz, one of the world’s most important oil shipping routes.
Analysts say that while such risks could affect global oil markets, Malaysia’s more pressing challenge may be the financial strain caused by higher prices rather than a direct supply shortfall.
Economist Geoffrey Williams said a prolonged closure of the strategic waterway could eventually tighten global oil supply.
“If the closure of the Strait of Hormuz continues into the next month or so, then there will be supply shortages,” he said.
Around 20 million barrels of crude oil and petroleum liquids pass through the strait each day, making it a critical chokepoint for global energy markets. However, Williams noted that oil prices have so far reacted only moderately to the geopolitical risks.
The recent spike above US$100 per barrel was short-lived, with prices now hovering between US$80 and US$90.
“If prices rise above US$100 or even US$125 per barrel, as seen in previous crises, sustaining current subsidy levels would become very difficult,” he said.
In such circumstances, he said, the government might have to consider policy adjustments such as tiered subsidies or reducing fuel benefits for higher-income households. For now, however, Williams believes the situation does not justify emergency restrictions on petrol consumption.
Malaysia currently intends to maintain the retail price of RON95 petrol at RM1.99 per litre despite upward pressure on global oil prices caused by geopolitical tensions.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the government should nevertheless explore precautionary measures to safeguard domestic fuel supply, particularly given Malaysia’s reliance on imported refined petroleum products.
“For instance, import of refined petroleum from the Middle East accounted for about 13.5% as of last year,” The Star reported him saying.
Malaysia sources most of its refined petroleum imports from Singapore, South Korea and China, which accounted for 39.5%, 11.5% and 10.2% respectively.
“These countries, in turn, import a sizeable amount from the Middle East.
“For instance, Singapore sourced about 37.3% of its oil imports from the region last year.
“This shows there is a direct link in how oil supply disruptions in the Middle East could affect Malaysia indirectly,” he said.
Oil shipments from the Middle East have been prevented from passing through the narrow waterway since United States and Israeli strikes on Iran, pushing oil prices higher and unsettling global markets.
About one-fifth of the world’s oil supply normally passes through the Strait of Hormuz. Iran’s Islamic Revolutionary Guard Corps said earlier this week it would not allow even “one litre of oil” to leave the region if US-Israeli attacks continue.
Afzanizam said any policy response should avoid overly restrictive measures, noting that Malaysia also produces its own crude oil and should seek to prevent a worst-case scenario from unfolding.
Instead, he suggested initiatives that could gradually reduce fuel consumption without causing alarm among the public, including encouraging flexible working arrangements and accelerating the adoption of electric vehicles.
“Last year, EV registrations surged by 105.7% to 44,813 units, indicating a strong response from Malaysians,” he said.
“Extending incentives could further boost EV adoption and help lower overall fuel consumption.”
He added that policymakers must strike a careful balance between ensuring preparedness and preventing unnecessary panic while keeping economic activity running smoothly.
Carmelo Ferlito, chief executive officer of the Centre for Market Education, also urged caution over proposals to introduce administrative controls such as limits on fuel purchases.
“I would be cautious about introducing measures such as limiting how much fuel consumers can purchase,” he said.
“Such restrictions often create unintended consequences, including panic buying, hoarding and distortions in supply chains. In many cases, they worsen the very shortages they are meant to prevent and could even encourage the emergence of black markets.”
Ferlito said Malaysia’s more realistic risk lies in the fiscal pressure arising from rising global oil prices rather than a sudden physical shortage of petrol. - March 12, 2026