Malaysia's Economy Faces Gulf War Risks as Oil Prices Surge Past $100

The ongoing conflict in the Gulf region is reshaping global energy and supply chains, causing oil prices to surge past $100 per barrel. The escalating tensions between Saudi Arabia and Yemen's Houthi militants have disrupted key maritime routes, including the Red Sea and Strait of Hormuz.

This has significant implications for countries like Malaysia, which relies heavily on imported refined petroleum products and is vulnerable to higher fuel costs. The country imports substantial volumes of crude oil, with a substantial portion transiting through the Strait of Hormuz.

The petrochemical sector in Malaysia also faces pressure due to disruptions in Middle Eastern supply chains, which could squeeze availability and drive up costs for raw materials like naphtha, ethylene, and propylene. Fertiliser production and imports are similarly exposed, with higher energy and raw material costs threatening food production costs at home.