Photo: Facebook/Petronas

Malaysia is using its diplomatic relationships to protect fuel supplies as disruption in the Strait of Hormuz pushes up energy costs and raises concerns over the country's dependence on imported crude oil.

Hormuz disruption exposes import risk

The waterway normally carries about one-fifth of global oil and liquefied natural gas flows, but has been severely disrupted since conflict involving the United States and Iran began in late February. Almost 40 per cent of Malaysia's crude imports pass through the strait.

Malaysia produces about 350,000 barrels of oil a day while consuming roughly 700,000 barrels, according to the Finance Ministry. Fuel subsidy spending rose from nearly RM800 million a month in January and February to around RM5 billion a month in March and April after international prices surged.

If high prices continue, the country's total fuel subsidy bill could reach about RM40 billion by the end of 2026. Malaysia nevertheless says its present supplies are sufficient while longer-term arrangements are pursued.

Diplomatic ties open alternative routes

Iran cleared seven Malaysian-owned vessels to pass through Hormuz without charge after describing Malaysia as a friendly nation. A Petronas vessel sailing from Yanbu in Saudi Arabia was later cleared to use the Red Sea despite threats to restrict passage through the Bab el-Mandeb Strait.

Malaysia is also exploring longer-term supplies. Petronas secured rights to operate gas Blocks 9 and 10 in Turkmenistan and expects to begin exploratory drilling in December. Russia has pledged supplies of petrol, diesel and gas for at least 20 years, with the arrangement still being finalised.

At the same time, Petronas plans to supply up to two million tonnes of LNG annually to Japan's Jera for 20 years from 2028. Malaysia has also discussed directing surplus fuel to Australia and diesel to countries including Timor-Leste.

What it means for foreigners in Malaysia

Foreign residents, motorists and businesses should watch fuel-price and subsidy announcements because prolonged high global prices can affect transport costs, deliveries and household budgets even when physical supplies remain adequate. Malaysia's subsidised pump prices currently provide some protection, but the sharp increase in government spending shows the pressure involved. Companies with energy-intensive operations or regional shipping exposure should review contingency plans and supplier terms. Travellers do not need to change ordinary plans based on the present supply position, but anyone arranging long-distance road travel should follow official updates rather than rumours about shortages.

13 August 2026

On 8/13/2026 at 10:13 AM, Uncle Claude said:

Malaysia is using its diplomatic relationships

Beyond the Middle East:

Canada and Malaysia expanded energy cooperation in late 2025 to increase trade in oil, LNG and renewables.

Malaysian state firm Petronas holds a major 20-year offtake agreement for Canadian LNG from British Columbia's Cedar LNG project.