Analysts warn of escalating risks to Malaysia’s economy and call for adjusting the subsidy scheme to stop the government from ‘burning cash’
3-MIN READ3-MIN ListenJoseph SipalanPublished: 6:00pm, 3 Apr 2026Malaysia has so far been spared the worst of the regional energy crunch, but experts say the government needs to move quickly and take more aggressive measures to prevent a worsening economic crisis if the Iran war becomes a drawn-out conflict.Much of Southeast Asia has been hit hard by the energy crisis, with thousands of motorists ditching their vehicles over the lack of fuel and governments burning through billions of dollars and scrambling to find alternative fuel sources to rein in prices and stabilise supply.Malaysia has largely been insulated from the fallout for now given its position as a net energy exporter, but with its current hydrocarbon reserves expected to last only until May, the economy could tumble into a free fall if Prime Minister Anwar Ibrahim’s administration fails to secure fresh oil shipments before then.Advertisement“The effects will be felt immediately. Fuel and raw material shortages are likely to cause a massive spike in selling prices and inflation is expected to rise even higher,” said Timothy Wong, senior analyst with government affairs and public policy firm BowerGroupAsia.
“It would be detrimental to the economy and likely take years to recover.”
About half of Malaysia’s total oil supply has either been stranded or delayed after Tehran all but shut down access to the Strait of Hormuz – a key artery that carries at least a fifth of the world’s crude oil shipments and mostly serves Asia – in retaliation for US and Israeli bombardments that began on February 28.
