KUALA LUMPUR: The ceasefire agreement in West Asia between the United States and Iran is unlikely to bring immediate relief to global oil and gas markets, as extensive damage to energy infrastructure is expected to take years to repair, analysts say.
The prolonged recovery timeline is set to keep global energy markets in a state of uncertainty, sustaining a high risk premium on oil prices for an extended period.
Security and political analyst at Universiti Teknologi Mara’s (UiTM) Centre for Media and Information Warfare Studies, Dr Noor Nirwandy Mat Noordin, said while diplomacy remains relevant, actions that sidestep international law and the United Nations (UN) Charter have undermined both national sovereignty and market stability.
He said the use of strategic routes such as the Strait of Hormuz as instruments of geopolitical pressure highlights the vulnerability of global energy supply chains.
"Disruptions along this key route have demonstrated how fragile the distribution system for oil and natural gas is to Asean, Asia and Europe,” he told Bernama on Wednesday (April 8).
Earlier, Iran’s top leadership confirmed that the administration of President Donald Trump had agreed to a 10-point proposal to end the conflict, Anadolu Ajansi reported, citing state broadcaster Islamic Republic of Iran Broadcasting.
According to Iran’s Supreme National Security Council, the proposal will form the basis for negotiations towards a broader agreement, although details have yet to be disclosed publicly.
It was reported that the proposal includes key demands such as guarantees of non-aggression, retention of Iran’s control over the Strait of Hormuz, recognition of its uranium enrichment rights, and the lifting of US sanctions.
Despite these developments, Noor Nirwandy said physical damage to oil and gas infrastructure in the conflict zone would require significant capital investment, limiting the ability of supply to respond to demand in the near term.
He also called on Asean to strengthen collective strategies to safeguard strategic assets from external pressure.
"We need stronger regional strategic cooperation and a form of collective defence to absorb external shocks.
"Asean must uphold its centrality and maintain a zone of peace and neutrality to protect economic sovereignty,” he said.
Sharing a similar view, Universiti Kebangsaan Malaysia (UKM) economist Associate Prof Dr Mustazar Mansur said price adjustments would lag even if the conflict ends, as cost increases are more easily passed on through surcharges than reversed.
He said higher oil prices are likely to feed into inflation, particularly through logistics and food costs.
Putra Business School economic analyst Prof Dr Ahmed Razman Abdul Latiff said markets would continue pricing in risk premiums as long as uncertainties surrounding sanctions and proxy conflicts remain unresolved.
Describing the ceasefire as a temporary pause rather than a resolution, he said indicators such as elevated shipping insurance costs, high tanker charter rates, widening price spreads and uncertainty over compliance with Organisation of the Petroleum Exporting Countries (Opec) quotas point to underlying market conditions.
"If infrastructure repairs take longer, prices may remain elevated for several quarters due to a new risk-driven floor price. Supply disruptions will also push up global inflation through transportation, industrial energy and food costs, raising the cost of living.
"Sectors most affected include aviation, logistics, petrochemicals and energy-intensive manufacturing, while consumers may continue to feel the impact even after the conflict ends due to price rigidity,” he said.
Ahmed Razman added that disruptions in the Strait of Hormuz, which handles about 20% of global oil trade, would continue to drive price volatility, increase insurance costs and strain supply chains, particularly for major Asian importers.
"In the medium term, this could shift the balance of power, increase leverage among producer countries and accelerate supply diversification, while making energy security a key geopolitical priority,” he said.
Meanwhile, National Chamber of Commerce and Industry of Malaysia (NCCIM) vice-president Datuk Dr A.T. Kumararajah said prolonged high oil prices could have fiscal implications.
He said if prices remain above US$100 per barrel for more than four months, government operating expenditure could rise by about 10%, potentially reducing gross domestic product (GDP) growth by up to 1.5%.
"Sectors most affected include logistics, aviation, construction and energy-intensive manufacturing, while consumers will continue to face higher costs as prices tend to fall more slowly than they rise,” he said.
The International Energy Agency previously confirmed that more than 40 energy assets across nine countries in West Asia were severely damaged, with repairs to facilities such as Qatar’s gas export infrastructure potentially taking up to five years. — Bernama
