WHEN the United States and Israel launched coordinated airstrikes on Iran on Feb 28, the immediate headlines focused on missiles and geopolitics.
But within days, the consequences were felt much closer to home – at the petrol station, at the supermarket, and in the cost of running a factory or a farm.
For Malaysians and their neighbours across South-East Asia, a war thousands of kilometres away is now determining the price of cooking oil, the availability of diesel, and the outlook for jobs and growth.
The Strait of Hormuz, the narrow waterway between Iran and Oman, carries roughly one fifth of the world’s oil and a large share of its liquefied natural gas. When Iran moved to block the strait, tanker traffic ground to a near-halt and energy markets went into shock.
Brent crude surged from around US$70 to past US$100 per barrel within 10 days of the conflict’s onset, and has since traded as high as US$120. Asian LNG prices rose by over 140%.
The disruption extends beyond energy: the Gulf also produces a significant share of global fertilisers, petrochemicals, and helium, with knock-on effects for agriculture, semiconductor manufacturing, and food packaging worldwide.
Malaysia is not a pure energy importer – PETRONAS ensures the country has upstream production capacity, and higher crude prices boost government revenue.
But in 2025, roughly 69% of Malaysia’s crude and condensate imports came from the Middle East.
Food manufacturers have warned that surging diesel costs could force price increases, fertiliser producers have suspended new orders, threatening palm oil production, and the semiconductor sector has flagged concerns about helium supply.
Asean under pressure
Across South-East Asia, the war has exposed dangerously thin energy reserves.
The Philippines, Singapore, Thailand and Vietnam rely on imports for 65% to 95% of their crude supply. Even Malaysia, a net energy exporter, sources 69% of its crude imports from the Gulf – making no country in the region fully immune.
Governments have responded with measures echoing Covid-19: the Philippines has moved parts of its government to a four-day work week, Thailand and Vietnam have encouraged civil servants to work from home, and Myanmar has imposed alternating driving days to conserve fuel.
Fuel shortages have been reported in Laos, Cambodia and parts of Thailand.
As China and Thailand curb refined fuel exports and governments prioritise domestic supply, regional energy networks are under severe stress.
Vietnam has suspended fuel exports. Thailand has banned jet fuel exports. Petrochemical companies in Singapore and Indonesia have declared force majeure.
Asean’s economic ministers have warned that freight, insurance, and logistics costs are already feeding inflationary pressure on food and essential goods across the region.
In comparison to our neighbours, Malaysians have many reasons to be grateful. The Malaysian government’s decision to maintain RON95 at RM1.99 per litre under the BUDI95 scheme has shielded tens of millions from the worst of the price shock, at a time when consumers elsewhere have faced increases of 30% to 50%. Malaysia’s extensive price controls on essential goods – sometimes criticised in normal times – have proven their worth precisely when needed most, helping to keep inflation contained while other economies brace for a surge.
The Prime Minister’s diplomatic engagement has also delivered tangible results. Datuk Seri Anwar Ibrahim’s direct communication with leaders in Iran, Egypt, Turkiye, and other nations has secured safe passage for Malaysian vessels through the strait – an advantage flowing from Malaysia’s longstanding policy of maintaining cordial ties across the Muslim world.
Diplomacy, in this case, translates directly into ships getting through, fuel arriving, and supply chains holding when others are breaking down.
Combined with Malaysia’s specialisation in higher-value manufacturing and a diversified industrial base, the country is weathering this storm from a position of relative strength – the result of decades of institution-building and active crisis management.
Challenges remain, of course: food prices will face upward pressure as logistics and fertiliser costs rise, and it is the B40 households who will feel it most. But the buffers in place today are buying Malaysia valuable time that many neighbours simply do not have.
Looking ahead
The crisis has given fresh momentum to renewable energy development.
Malaysia has abundant solar and hydroelectric resources, and reducing dependence on Middle Eastern crude is a matter of national security.
The Asean power grid – a vision for connecting electricity networks across the region – is being revived with fresh urgency.
The lessons extend beyond energy. Asean member states have remarkable complementary strengths – Indonesia and Thailand in agriculture, Malaysia and Singapore in semiconductors, Vietnam in manufacturing, the Philippines in services.
Yet, intra-Asean trade accounts for only about 22% of the bloc’s total, far below levels seen in the European Union.
Too often, Asean nations trade more with distant partners than with one another. If the region can build shorter, more resilient supply chains among its own members – in food, fertiliser, pharmaceuticals, and industrial inputs – it becomes less exposed to distant chokepoints.
This means reducing non-tariff barriers, investing in regional logistics, pursuing mutual recognition of standards, and exploring joint stockpiling of essential commodities.
The export bans and supply hoarding of recent weeks are a warning: if Asean members cannot coordinate during a crisis, the promise of economic integration rings hollow. But if they can, the bloc emerges stronger.
The war in Iran is a reminder that no country is truly insulated from distant conflict.
But it is also a reminder that preparation matters, institutions matter, and the choices governments make in ordinary times determine how well their people are protected in extraordinary ones.
Malaysians can take comfort in the fact that their country entered this crisis better prepared than most.
The task now – for Malaysia and for Asean – is to ensure that when the next disruption comes, the region is even better prepared.
Tengku Datuk Seri Zafrul Aziz is the chairman of Southeast Asia Futures Initiative Centre (SEAFIC) and senior political advisor to the Prime Minister. Views expressed here are entirely the writer’s own.
