Malaysia raises unsubsidised fuel prices for fourth time in five weeks as Middle East tensions push oil higher

Motorists in Malaysia will pay more for unsubsidised fuel as pump prices rose for the fourth time in five weeks on Thursday (Sept 17).

Announcing the adjusted petrol and diesel prices for the period of Sept 17 to 23, the finance ministry said retail prices for unsubsidised Ron95, Ron 97 and diesel would each increase by 35 sen per litre.

This follows the 25 sen-per-litre increase for the period of Sept 10 to 16. 

Explaining the hike, the ministry highlighted that Brent crude future climbed back above US$100 (S$127) per barrel and approached nearly US$110 during the Automatic Pricing Mechanism (APM) period.

Malaysia uses the APM formula — introduced in 1983 to stabilise prices based on market fluctuations — when determining weekly petrol prices.

Following the latest round of pricing, the new prices for unsubsidised Ron95, Ron97, and diesel are RM4.37 (S$1.36), RM4.85 and RM5.27 per litre, respectively.

Prolonged petroleum price volatility

The ministry said it expects prolonged petroleum price volatility in the coming period, citing the widening Middle East war, which has disrupted key oil transport routes and infrastructure.

It noted that a drone attack temporarily halted operations on Saudi Arabia's East-West pipeline, one of the main routes that bypasses the Strait of Hormuz.

Meanwhile, Iranian attacks on shipping and US strikes on Iranian tankers have caused vessel traffic through the Strait of Hormuz to fall to single-digit levels, it added.

This, along with Gulf Arab states postponing planned discussions with Iran on shipping lane security, fuelled concerns that global oil supplies could be further disrupted.

Elsewhere, the ministry noted that refining capacity in Russia has also become disrupted amid its conflict with Ukraine.

Summing up the situation, it said: "Crude oil supply constraints and disruptions in refining capacity have continued to limit the output of refined petroleum products, thus putting pressure on world petroleum prices. 

"Increased tensions in the Middle East and the Russia-Ukraine conflict risk causing prolonged petroleum price volatility in the coming period."

Across the Causeway, motorists in Singapore are also experiencing rising pump prices, with hikes announced by all but one major fuel company there since Sept 14. 

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editor@asiaone.com