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Iman Muttaqin Yusof

Four weeks into the US-Israeli war on Iran, the crisis is beginning to bite in Malaysia, where Prime Minister Anwar Ibrahim has cut the monthly quota for subsidised petrol and food manufacturers are warning that surging diesel costs could force them to close or raise prices.
The move reflects how a distant geopolitical shock is beginning to feed directly into Malaysia’s fuel bill, food supply chain and inflation outlook, analysts note.
In a special televised address on Thursday, Anwar said the fallout from the conflict was no longer something Malaysia could watch from a distance.
He said, however, that its vessels were once again being allowed through the Strait of Hormuz – the important chokepoint for global oil and gas trade – following talks between Anwar and leaders in Iran, Egypt, Turkey and other regional countries.
Malaysia, a Muslim-majority country, has long maintained cordial ties with Iran and has recognised Tehran’s right to protect its sovereignty while also urging a rapid resolution to the conflict.

Anwar said the blockade at the Strait of Hormuz, the war and disrupted oil and gas supplies “all have an impact on us”, even if Malaysia was in a better position than some countries because of state-owned energy giant Petronas.
He said food supplies had also been affected and that prices would “certainly rise”, alongside those for fertiliser, oil and gas.
The government’s most immediate move was to keep the subsidised BUDI95 petrol programme at 1.99 ringgit (50 US cents) per litre while lowering the monthly eligibility cap to 200 litres from 300 litres starting April 1.
Malaysia will also impose limits on each fuel purchase, tighten enforcement against smuggling and leakages, and allow selected civil servants to work from home in stages, while urging the private sector to consider similar arrangements.
Since the US-Israel war on Iran began, global oil prices have swung sharply higher and supply chains from fuel to fertiliser have come under strain. US President Donald Trump said on Thursday that talks were going “very well” and that he would pause attacks on Iran’s energy plants for 10 days, though analysts noted markets remained jittery and ceasefire hopes fragile.
Reuters reported that the war had nearly halted shipments through the strait, which usually carries about a fifth of the world’s crude oil and liquefied natural gas supply, while Brent crude was trading above US$107 a barrel on Friday after another volatile week.
Meanwhile, British bank Barclays said a prolonged disruption at Hormuz could knock 13 million to 14 million barrels a day off global supply.

That, analysts say, is why Anwar’s decision matters. It signals that while Malaysia may have managed to secure passage for its vessels, it is still being hit by the war through prices, tighter supply and a swelling subsidy burden, they add.
“Seeing fuel prices go up and up is definitely a clear indicator of how the Middle East conflict can bring crisis to our shores,” Ahmad Mohsein Azman, a senior analyst at consultancy BowerGroupAsia, told This Week in Asia.
Cutting the BUDI95 allocation to 200 litres, he said, was “a prudent measure” that balanced both fiscal and supply pressures while the government prepared for a longer disruption.
“Petroleum feedstock for Malaysia cannot immediately be replenished with the restoration of access for Malaysian ships to the Strait of Hormuz,” he said, adding that other countries would also be scrambling to rebuild inventories.
Amir Fareed Rahim, strategic director at risk consultancy KRA Group, said Malaysia had now entered the point where “an external shock is becoming a domestic economic problem”.
“The government is still holding the subsidised RON95 price at 1.99 ringgit, but cutting the BUDI95 quota signals that the fiscal cost of protection is no longer sustainable at current oil prices,” he said.
“More importantly, we are now seeing clear spillover into the real economy, especially food manufacturing and logistics, as the floated diesel prices have experienced three consecutive weeks of increases.”
Malaysia was “not yet in panic territory”, he said, but was clearly in “a second-order stress phase”.


Costs spread
Yet in Malaysia, food manufacturers and sundry goods traders on Thursday urged the government to stabilise diesel prices and provide temporary relief, saying the shock was now affecting transport, packaging and raw materials all at once, according to local media.
Ding Hong Sing, president of the Malaysian Food Manufacturers Association, warned that rising transport costs would force manufacturers to either “close down or increase prices”.
Some producers, he said, were already absorbing an extra 60,000 ringgit to 80,000 ringgit a month in diesel costs, while others were paying more than 100,000 ringgit.
Hong Chee Meng, president of the Federation of Sundry Goods Merchants Associations of Malaysia, described it as a “double hit” of higher diesel prices and a higher sales and service tax burden. For some products, he said, costs had already risen by about 15 per cent.
“In the end, there are only two choices: close shop or raise prices,” he was quoted as saying by local English daily The Star.
Even fertiliser makers in Malaysia had suspended new orders as feedstock shortages and supply chain disruptions linked to the Middle East conflict drove up raw material prices, Reuters reported last week.
Asrul Hadi Abdullah Sani, associate vice-president at The Asia Group, said Anwar was trying to preserve the political cushion of a cheap headline fuel price while quietly tightening quotas and plugging leakages before the full force of the shock arrived.
“Despite open lanes in the Strait of Hormuz, Malaysia is absorbing the shock not through shortages, but through rising cost pressures embedded deeper in the supply chain,” he told This Week in Asia. “That is precisely the kind of inflation that feeds directly into household expenses.”


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The quota cut for subsidised petrol reflects how the distant war is affecting Malaysia, with the food industry also sounding the alarm


The quota cut for subsidised petrol reflects how the distant war is affecting Malaysia, with the food industry also sounding the alarm.


Iran crisis bites into Malaysia’s supply chain as Anwar cuts fuel subsidy quota

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The quota cut for subsidised petrol reflects how the distant war is affecting Malaysia, with the food industry also sounding the alarm

The quota cut for subsidised petrol reflects how the distant war is affecting Malaysia, with the food industry also sounding the alarm