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Oil Nears $95 a Barrel, Putting Pressure on Malaysia’s Economy
🇲🇾 Malaysia /Economy & Trade

Oil Nears $95 a Barrel, Putting Pressure on Malaysia’s Economy

From Utusan Malaysia · () Malay

Translated from Malay and summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Context piece
  • Global crude oil prices approaching $95 a barrel could increase Malaysia’s transport and import costs, affecting inflation and living expenses if sustained.
  • UKM economist Mohd. Rizal Palil said fuel subsidies, including the BUDI95 RON95 subsidy, are currently cushioning consumers but placing a heavy burden on the government.
  • He said Malaysia’s second-half economic growth could remain healthy if higher fuel costs continue to be absorbed through subsidies, while warning that prolonged high prices could raise business costs and consumer prices.

Global crude oil prices nearing US$95 a barrel are putting Malaysia under growing economic pressure, with transport and imported goods likely to become more expensive if the increase persists.

Professor Mohd. Rizal Palil of Universiti Kebangsaan Malaysia said the impact on Malaysian consumers has so far been softened by government fuel subsidies, including the BUDI95 subsidy for RON95 petrol. “The BUDI95 subsidy from the government actually keeps our daily costs stable,” he told Utusan Malaysia.

That protection, however, comes at a substantial public cost. The government spent about RM11.2 billion on subsidies between January and May 2026, according to Mohd. Rizal, while subsidies reached roughly RM5 billion in May alone. The figures show that higher oil prices are affecting not only households and businesses, but also government finances.

The BUDI95 subsidy from the government actually keeps our daily costs stable.

— Mohd. Rizal PalilThe UKM economist explained how fuel subsidies are cushioning Malaysian consumers from higher oil prices.

Mohd. Rizal said Malaysia’s economic growth in the second half of 2026 could remain strong even if crude prices stay above US$90 a barrel, provided the government continues to absorb rising fuel costs through subsidies. But he questioned how long that approach could last. “The issue is, how long can the government continue providing subsidies?” he said.

Sustained high oil prices could also erode some of the benefit from Malaysia’s strong growth in the first half of the year. Higher fuel costs can spread through production, transport and the prices of goods and services. Companies that rely heavily on fuel and transportation may find it harder to keep prices unchanged, adding to pressure on consumers and the wider economy.

The issue is, how long can the government continue providing subsidies?

— Mohd. Rizal PalilHe warned that prolonged subsidies could place an increasingly heavy burden on government finances.
About this summary

Originally published by Utusan Malaysia in Malay. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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