Malaysia eyes new energy sources as oil prices rise amid Middle East conflict: DPM Fadillah

KUALA LUMPUR: Malaysia is looking to other nations as possible energy suppliers if the Middle East conflict persists, Deputy Prime Minister Fadillah Yusof said, as calls from the opposition grow for additional measures to manage rising global oil prices. 

His comments came as Prime Minister Anwar Ibrahim said that over half of Malaysia’s oil supply comes from the Strait of Hormuz, a key waterway closed due to the conflict.

Fadillah said on Sunday (Mar 22) that national energy firm Petroliam Nasional Berhad (Petronas) had contingency plans in place to ensure the country’s energy supply remained stable despite the conflict, with Australia and other Asia-Pacific nations being among the options considered as possible alternative suppliers. 

“Petronas has looked at various plans to find alternative supplies if gas or oil cannot be delivered through areas affected by the current conflict,” he told reporters, as quoted by local media.

“They are also monitoring supplies from Australia and countries in the Asia-Pacific region, all these alternatives are being prepared … The planning is progressing well and our supply remains stable.” 

Fadillah, who is also Malaysia’s Minister of Energy Transition and Water Transformation, was responding to a question at an event in Kuching, Sarawak on measures to ensure the nation’s energy supply remained secure following the Iran war. 

The Strait of Hormuz, a key shipping route through which about 20 per cent of the world’s oil and gas normally flows, has been closed by Iran after it was hit by US-Israel airstrikes last month, pushing global oil prices higher. 

Earlier in a Facebook post on Sunday, Malaysia Prime MInister Anwar Ibrahim said that 50 per cent of Malaysia’s oil supply passes through the strait, as he sought to explain why Malaysia has been affected by the surge in oil prices despite being an oil-producing nation.

“Although Malaysia is an oil producer, we actually import more oil than we export,” he said. 

In the past two weeks, the Malaysian government has raised the price of RON97, non-subsidised RON95 and diesel in West Malaysia by RM1.30, RM0.60 and RM1.60 per litre respectively, local media reported.

However, the government continues to subsidise RON95 for eligible Malaysians and diesel in East Malaysia, a move estimated to cost RM3.2 billion a month, up from RM700 million previously, according to Finance Minister II Amir Hamzah Azizan on Mar 13. 

The opposition has called for broader measures to address the potential economic impact. 

Opposition coalition Perikatan Nasional chairman Ahmad Samsuri Mokhtar has urged the government to form a non-partisan national council to discuss economic interventions.

With the conflict persisting, he said Malaysians are starting to feel the effects of higher energy prices, supply chain disruptions and rising logistics costs. 

“This chain reaction is unavoidable and in the coming months, the nation could face higher prices for basic goods and food, steeper transport and logistics costs, and more expensive utilities and services,” he said, as quoted by local media platform Free Malaysia Today on Sunday.

He added that there could be an even bigger impact on the job market as affected industries are possibly reducing their manpower

“Without proactive policy intervention, the risk of retrenchments may rise, especially in manufacturing, logistics, and small and medium enterprises heavily affected by higher raw material costs,” he said. 

Ahmad Samsuri suggested that the government bring together non-governmental organisations, academics, industry players and civil society to collectively come up with solutions to ensure decisions are made in the country’s collective interests rather than narrow political considerations. 

Separately, a former Member of Parliament (MP) from the Democratic Action Party (DAP) has called for a bipartisan parliamentary committee to look into tapping Petronas’ profits to subsidise petrol in view of the surge in oil prices. 

While the government’s monthly fuel subsidy bill is expected to increase, this amounted to a fraction of the national oil company’s net profit, said P Ramasamy, who is now the chairman of the political party Urimai. 

“The government will need to be prepared to spend a larger sum of Petronas’s funds to subsidise the increased oil prices,” he said in a Facebook post, quoted by Free Malaysia Today on Sunday. 

However, current DAP MP Chong Zhemin described Ramasamy’s proposal as unsustainable and irresponsible, saying that profits from the national oil firm should be treated as strategic national wealth instead of for funding blanket fuel subsidies.

He cited Norway’s approach as an example, where oil revenues are largely saved and invested globally by its sovereign wealth fund. 

“Malaysia should move in a similar direction by ensuring that a meaningful share of Petronas’s windfall gains is channelled into long-term savings and investment, rather than being fully consumed through short-term subsidies,” he said on Monday.