PETALING JAYA: The damage to oil and gas production and refining infrastructure will take months, if not years, to be fully restored even if the Middle East conflict ends immediately.
Sunway University economics professor Dr Yeah Kim Leng said fuel and petrochemical supply shortages, along with elevated prices, may persist until production and demand are rebalanced across critical industries, from fertilisers and plastics to specialty gases and natural gas liquids.
Yeah said during the transitional period, the exposed industries must proactively identify internal and external vulnerabilities.
These include implementing robust cost mitigation strategies, diversifying import sources and exploring innovative approaches such as import substitutes, regional collaboration and investment in local production capabilities to strengthen supply chain resilience.
“Adopting advanced technologies for efficient resource management, fostering public-private partnerships to share risks, and enhancing inventory planning to buffer against disruptions will be critical to navigating prolonged market instability,” he said.
He said the Prime Minister has already announced some mitigation measures, including reducing the quantity of subsidised RON95 fuel from 300 litres to 200 litres per month and work from home arrangements for civil servants, to reduce consumption and prolonging existing supplies.
“Further measures will be targeted at vulnerable segments of businesses and households to alleviate specific supply shortages, cost pressures, financing constraints and impediments hindering their ability to cope with the changing economic and financial environment,” Yeah said.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said once the high oil prices are transmitted to other products and services, the new level of general prices would be established.
“So, crude oil prices might come down but prices of other goods and services may not,” he added.
European Union’s energy commissioner Dan Jorgensen said on Tuesday that oil and gas priceswould not return to pre-conflict levels anytime soon even if peace is declared soon.
He said although there are no immediate oil and gas supply shortages in the bloc, there is pressure on diesel and jet fuel supply as well as “increasing constraints” in global gas markets that are resulting in higher electricity prices.
