PETALING JAYA: Economists have urged caution over proposals to limit RON95 petrol purchases for Malaysians following the Iran-US conflict, warning that administrative controls could trigger unintended consequences such as panic buying and supply distortions.
Although global tensions and potential disruptions to key shipping routes such as the Strait of Hormuz could affect oil markets, they said Malaysia is unlikely to face an immediate physical shortage of petrol.
However, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the government should explore various options to safeguard fuel supply, given Malaysia’s reliance on imported refined petroleum products.
“For instance, import of refined petroleum from the Middle East accounted for about 13.5% as of last year,” he said.
He said the bulk of it comes from Singapore, South Korea and China, where the share of total imports stood at 39.5%, 11.5% and 10.2% respectively.
These countries, in turn, import a sizeable amount from the Middle East.
“For instance, Singapore sourced about 37.3% of its oil imports from the region last year.
“This shows there is a direct link in how oil supply disruptions in the Middle East could affect Malaysia indirectly,” he said when contacted yesterday.
Oil shipments from the Middle East have been blocked from passing through the narrow waterway since the US-Israeli strikes on Iran, causing oil prices to soar and wreaking havoc on global markets.
About one-fifth of the world’s oil passes through the strait, and Iran’s Islamic Revolutionary Guard Corps said earlier this week it will not allow even “one litre of oil” to leave the region if US-Israeli attacks continue.
Afzanizam said any measures introduced should not be overly restrictive as Malaysia also produces its own crude oil and should avoid a worst-case scenario.
Instead, he suggested policies that could reduce fuel consumption without causing public alarm, such as encouraging flexible working arrangements and accelerating the adoption of electric vehicles (EVs).
“Last year, EV registrations surged by 105.7% to 44,813 units, indicating a strong response from Malaysians,” he said.
“Extending incentives could further boost EV adoption and help lower overall fuel consumption.”
He said the government must strike the right balance between ensuring preparedness and avoiding unnecessary panic among the public while keeping economic activities running smoothly.
Centre for Market Education chief executive officer Carmelo Ferlito also cautioned against introducing administrative controls such as limits on fuel purchases.
“I would be cautious about introducing measures such as limiting how much fuel consumers can purchase,” he said.
“Such restrictions often create unintended consequences, including panic buying, hoarding and distortions in supply chains. In many cases, they worsen the very shortages they are meant to prevent and could even encourage the emergence of black markets.”
Ferlito said Malaysia’s more realistic risk is not a sudden physical shortage of fuel but the financial strain caused by higher global oil prices.
The government, he said, intends to keep RON95 at RM1.99 per litre for now despite rising oil prices linked to geopolitical tensions.
Economist Geoffrey Williams said a prolonged disruption to the Strait of Hormuz, a critical global energy chokepoint through which roughly 20 million barrels of crude oil and petroleum liquids pass daily, could eventually tighten global supply.
“If the closure of the Strait of Hormuz continues into the next month or so, then there will be supply shortages,” he said.
However, he noted that oil prices have so far risen only moderately despite geopolitical risks.
The recent spike above US$100 per barrel was short-lived, he said, noting that prices are currently hovering in the US$80 to US$90 range.
“If prices rise above US$100 or even US$125 per barrel, as seen in previous crises, sustaining current subsidy levels would become very difficult,” he said.
In such a scenario, Williams said the government may need to consider reforms such as tiered subsidies or reducing benefits for higher-income groups.
However, he believed the current situation does not yet warrant emergency restrictions on petrol consumption.
