Brace For Prolonged Oil Market Pressure Despite Easing West Asia Conflict, Says Economist
KUALA LUMPUR, March 26 (Bernama) -- Malaysians are advised to prepare for a prolonged period of pressure in the oil market even if the conflict in West Asia eases in the near term.
Universiti Teknologi Petronas adjunct lecturer Samirul Ariff Othman said Malaysia’s real challenge extends beyond the conflict period and continues throughout the recovery phase of the global energy system.
He said that the oil market depends on an interconnected network of systems, including tanker availability, maritime insurance, port access, refining configurations and supply contracts, among others.
“When critical routes such as the Strait of Hormuz are disrupted, all these systems are affected simultaneously. Prices may spike immediately, but the recovery of physical supply takes much longer,” said Samirul in a statement.
Although oil flows may continue, he said that the costs could rise sharply due to risks to tankers, higher war risk insurance premiums, the use of alternative routes and increased freight charges.
Samirul said the situation is expected to directly impact fuel prices, increase the government’s subsidy burden under the Budi Madani RON95 (BUDI95) programme, and drive up electricity, transport, logistics and food costs.
He pointed out early signs of strain in the Asia-Pacific region due to jet fuel shortages, which include petrol station closures and flight disruptions in the Philippines, fuel shortages in parts of Australia, and the cancellation of about 1,100 Air New Zealand flights.
Meanwhile, Samirul lauded Putrajaya’s early intervention measures to strengthen the country’s economic resilience.
At a special meeting chaired by Prime Minister Datuk Seri Anwar Ibrahim yesterday, the National Economic Action Council (MTEN) agreed to diversify energy sources, explore alternative shipping routes and strengthen supply resilience.
Samirul described the measures proposed by MTEN as directionally sound, but noted that they are more medium-term solutions.
He also stressed the need for public participation measures, such as fuel conservation, to extend the existing supply during periods of system stress.
“Energy security is no longer just about reserves or production, but the resilience of the entire supply chain, and that takes time to rebuild,” said Samirul.
-- BERNAMA