PETALING JAYA: Finance minister II Amir Hamzah Azizan said maintaining subsidised petrol and diesel prices amid rising global prices due to the Middle East war will increase the government’s monthly fuel subsidy bill to about RM3.2 billion, up from RM700 million previously.
Speaking at a press conference in Putrajaya following a special Cabinet meeting, Amir said the government is in a strong position to absorb the increase thanks to the various fiscal reforms and consolidations it has undertaken over the past three years.
“As Prime Minister Anwar Ibrahim said, Malaysia has sufficient petrol and diesel supplies. Petronas and other companies are working to extend supply, and unlike some other countries, there is no disruption to domestic fuel availability.
“The country also has a stable gas supply, supported by domestic production, refinery capacity, and storage. In terms of supply, the situation is stable,” he said.
“However, Malaysia is still affected by rising global prices, and the government is working to ensure that the rakyat are supported. While these measures (subsidies) help, it’s important to understand that maintaining current fuel prices has implications on the government’s budget.”
Amir added that the government is encouraging energy conservation measures in public offices, including reviewing work-from-home arrangements and adjusting office air-conditioning settings.
He also refrained from commenting on the economic impact if oil were to hit US$200 a barrel amid the Strait of Hormuz blockade, this after Iran’s military warned on Wednesday that global prices could reach that level.
Brent crude prices have surged from US$60 per barrel to US$119 per barrel since the start of the war, and has currently stabilised at around US$100 per barrel.
Amir said the government is focusing on issues it can control, particularly ensuring sufficient supply and diversifying the country’s energy sources.
“We should avoid speculation as it can be dangerous. When there is conflict in the Middle East, there is always a lot of speculation.
“We are monitoring the situation and providing support where needed, including managing subsidies to maintain fuel prices for the next two months.
“If the situation persists beyond that, we may need to take additional measures, but no one can predict how long the conflict will last,” he said
Supply constraints from the Middle East, a region that serves as the world’s leading energy supplier, are largely due to a blockade at the Strait of Hormuz – through which a fifth of global oil passes.
Tensions in the Middle East have escalated since Feb 28, following attacks by Israel and the United States on Iran, and Tehran’s retaliatory strikes on US interests in Gulf countries.
