PETALING JAYA: Malaysia’s greatest vulnerability in the escalating US-Iran conflict may not lie in its modest trade ties with Tehran but in the fragile global oil and shipping arteries that sustain its economy.
Global attention has now shifted to the Strait of Hormuz, a strategic maritime chokepoint through which a substantial share of the world’s crude oil supply transits daily, following reports of the death of Ayatollah Sayyid Ali Hosseini Khamenei, the supreme leader of Iran.
Despite Malaysia’s limited direct trade exposure to Iran, analysts caution that any disruption in Hormuz could cause significant ripples in fuel prices, marine insurance premiums and domestic inflation.
International Islamic University Malaysia international relations expert Assoc Prof Dr Mohd Yazid Zul Kepli said Malaysia’s exposure stems more from global market mechanisms than from bilateral trade figures.
“Malaysia has a total trade with Iran of only RM2.6 billion from 2024 to 2025. I think this is relatively small,” he said.
However, he stressed that such figures do not shield the country from wider economic aftershocks.
“Malaysia has broader exposure through higher energy and shipping costs because Hormuz disruptions are already affecting tanker movements and insurance.
“For Malaysia, this could mean more expensive crude and fuel imports, higher costs for industry and transport, and inflationary pressure across the economy.”
Mohd Yazid noted that even without a full-scale regional war, prolonged instability alone could trigger cascading economic consequences.
“An important point people often miss is that Malaysia can still be affected even if its own ships are not directly in danger.
“Global oil prices, tanker availability and marine insurance rates can spike very quickly once traffic through the Strait of Hormuz is disrupted.
“The main risks for Malaysia are higher fuel and goods prices, shipping and travel disruptions, as well as the possibility of online or sectarian tensions spilling over into public debate.”
Beyond economics, he said the immediate geopolitical fallout from Khamenei’s reported death is likely to be heightened volatility across the Middle East.
“Khamenei’s death is most likely to make the Middle East more unstable in the short term because it can trigger both a succession struggle inside Iran and stronger retaliation by Iran or its allies.
“A point many people miss is that the danger may increase not only from Iran itself but also from hardliners, proxy groups, or security forces trying to show strength during a leadership vacuum.”
Diplomatically, Mohd Yazid urged restraint and strategic neutrality.
“Malaysia should remain firmly non-aligned, support de-escalation efforts and uphold international law by condemning unlawful attacks and encouraging dialogue,” he said.
He added that Putrajaya must safeguard its shipping and energy interests while avoiding any perception of siding with either Washington or Tehran.
Malaysia, he said, should utilise Asean, the Organisation of Islamic Cooperation and the United Nations to advocate restraint while preparing contingency plans for potential oil, trade and consular risks.
Looking ahead, Mohd Yazid said the crisis could accelerate longer-term strategic recalibrations.
“The biggest shift may not be Iran alone, but the normalisation of crisis-driven trade and security realignment.
“If the Hormuz risk remains high, Asian states may quietly diversify their shipping routes, energy partners, defence ties, and payment channels.
“That could slowly reshape alliances and regional priorities, including in Asean. Malaysia should therefore prepare not only for oil shocks but also for a world where strategic neutrality becomes harder to maintain.”
Meanwhile, Universiti Utara Malaysia geopolitical analyst Assoc Prof Dr Mohamad Faisol Keling expressed confidence that Malaysia would not be singled out in maritime security terms.
“Generally, Malaysia needs to declare or notify Iran if it passes through the Strait of Hormuz.
“With good relations between Iran and Malaysia, and at the same time, Malaysia being a country that is respected and esteemed by Arab and Western countries, I am confident that Malaysia will not be much of a target,” he said.
He added that Malaysia should continue grounding its foreign policy in international law, citing Article 2(4) of the UN Charter, which prohibits the use of force against another state, and Article 54, which outlines a country’s right to self-defence.
