KUALA LUMPUR, May 7 (Xinhua) -- Malaysia is set to benefit from higher crude oil prices as a net exporter, but rising geopolitical tensions in the Middle East and supply disruptions in the Gulf could heighten inflationary and fiscal risks, according to analysts.
Malaysia stands to gain additional revenue from elevated oil prices, but its exposure to global supply shocks, logistics disruptions, and inflationary pressures remains a key concern amid escalating geopolitical tensions involving the United Arab Emirates's exit from OPEC and the wider OPEC+ and broader Middle East conflict, MBSB Research said in its recent note.
The research house noted Malaysia's 2026 budget assumptions were based on Brent crude at 60 U.S. dollars to 70 dollars per barrel, but sustained prices above 100 dollars have shifted fiscal dynamics.
Beyond prices, it flagged Strait of Hormuz disruptions as a key near-term risk, affecting imports and exports of critical industrial inputs. Malaysia's inflation has already edged up to 1.7 percent due to higher shipping, insurance, and input costs.
According to the research house, major industries like glove and technology rely on specialized chemicals and gases that often transit through the Gulf. The blockade has created a two- to four-week lag in industrial inputs, causing Malaysia's gross domestic product growth to slow down to 5.3 percent in the first quarter, falling 16 percent quarter-on-quarter.
MARC Ratings also said in its recent note that, despite Malaysia's headline inflation remaining contained at 1.7 percent in March, early cost pressures are emerging, particularly in transport. Transport inflation rose 2.1 percent month-on-month, outpacing other categories, which were largely stable.
The ratings agency projects Malaysia's full-year 2026 inflation to rise to 2.1 percent, driven by elevated fuel and freight costs feeding into broader price increases for consumer goods and food staples. ■