The escalating conflict involving the United States, Israel and Iran has sent shockwaves through global oil markets. With strikes on Iran and mounting threats to close the Strait of Hormuz — a chokepoint that carries roughly 20% of the world’s oil — crude prices are expected to spike sharply when markets reopen.
Analysts are now openly discussing the possibility of Brent crude hitting US$95 to US$110 per barrel, with some projecting a surge to US$100 or more if the disruption becomes prolonged.
But the key question for Malaysians is simple:
How much will RON95 go up?
Oil Already Jumped 10% — And Could Climb Higher
On Friday before the US–Israel strikes on Iran, Brent crude (the global oil benchmark) was trading around US$72.48 per barrel.
The global oil benchmark has rallied this year and reached around $73 a barrel on Friday for its highest since July, buoyed by growing concern over the potential attacks that arrived a day later.
Brent crude has reportedly jumped nearly 10% in over-the-counter trading to around US$80, with energy analysts from firms such as Rystad Energy and Barclays warning that prices could rise by another US$15–US$20 when trading fully resumes.
“While the military attacks are themselves supportive for oil prices, the key factor here is the closing of the Strait of Hormuz.
“We expect prices to open (after the weekend) much closer to $100 a barrel and perhaps exceed that level if we see a prolonged outage of the Strait,” said Ajay Parmar, director of energy and refining at ICIS.
If the Strait of Hormuz is partially or fully disrupted, oil supply losses could reach 8 to 10 million barrels per day — a massive shock to global markets.
In such a scenario, US$100 oil is not impossible.
Malaysia’s Position: Subsidised RON95 at RM1.99
Prime Minister Anwar Ibrahim has stated that the government will try to maintain RON95 at RM1.99 per litre under the Budi95 subsidy programme.
However, he also admitted:
“We will give the maximum effort to hold off (on raising prices). But the market is beyond our control, and we cannot guarantee there won’t be any price increase.
That statement is crucial. It signals that while the government intends to shield consumers, prolonged high oil prices will strain public finances.
What Happens If Oil Hits US$100?
Let’s break it down.
Historically:
- When Brent crude rises by US$10 per barrel, Malaysia’s fuel subsidy burden increases significantly.
- At oil prices above US$90–US$100, subsidy costs balloon into the tens of billions annually.
If Brent moves from US$80 to US$100:
- That is a 25% increase in crude prices.
- Without subsidies, pump prices could theoretically rise by 30–40 sen per litre or more.
- But because RON95 is heavily subsidised, the government absorbs the difference.
The real question is not whether RON95 should rise — but whether Putrajaya can afford to keep absorbing the cost.
Three Possible Scenarios for RON95
1️⃣ Short-Term Spike (Oil retreats below US$90)
If the conflict stabilises and oil drops back:
- RON95 likely remains at RM1.99.
- The government absorbs temporary losses.
- No immediate price change.
2️⃣ Oil Stabilises Around US$95–US$100
If oil remains elevated for months:
- Subsidy costs soar.
- The government may introduce targeted subsidy rationalisation.
- RON95 could rise modestly to around RM2.10–RM2.30 per litre.
3️⃣ Oil Surges Above US$110 and Hormuz Closes
In a worst-case prolonged war scenario:
- Massive fiscal pressure.
- Subsidy restructuring becomes unavoidable.
- RON95 could climb toward RM2.50 or higher, depending on policy decisions.
This would not happen overnight — but sustained high oil makes it increasingly difficult to defend RM1.99.
Why Malaysia Is Vulnerable
Malaysia is an oil-producing nation, but it also imports refined petroleum products and is exposed to global benchmark pricing.
Even if Petronas benefits from higher crude prices, the government still carries the subsidy burden to keep domestic prices stable.
Higher oil also means:
- Rising inflation
- Higher transport costs
- Pressure on food prices
- Strain on Bank Negara’s monetary outlook
If crude stays above US$90, inflation expectations may rise again.
Political Risk
Fuel prices are politically sensitive. Any increase in RON95 will be felt immediately by:
- Middle-class commuters
- Grab drivers
- Logistics operators
- Small businesses
The government will try to delay any hike as long as possible. But sustained US$100 oil changes the equation.
So, Will RON95 Go Up?
Right now: Not immediately.
But if Brent crude remains near US$100 for several months, a price adjustment becomes increasingly likely — especially if fiscal pressures mount.
The government can defend RM1.99 during a temporary crisis.
It cannot defend it indefinitely in a prolonged war-driven oil shock.
Final Assessment
If the conflict escalates and oil holds above US$95:
👉 Expect serious discussion on subsidy rationalisation.
👉 Expect fiscal pressure to intensify.
👉 Expect RON95 to eventually move — though likely gradually, not suddenly.
For now, Malaysians are shielded.
But global wars have a way of showing up at the petrol pump.
And if US$100 oil becomes the new normal, RM1.99 may not survive the year.
TheRealNehruism (nehru.sathiamoorthy@gmail.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
The User Content (as defined on Newswav Terms of Use) above including the views expressed and media (pictures, videos, citations etc) were submitted & posted by the author. Newswav is solely an aggregation platform that hosts the User Content. If you have any questions about the content, copyright or other issues of the work, please contact creator@newswav.com.
