The government’s fuel subsidy bill has risen to RM8.28 million per hour, or roughly RM200 million a day, as the Middle East conflict continues to push global crude oil prices well above the levels Malaysia budgeted for this year.

Nurhisham Hussein, economic adviser at the Prime Minister’s Office, said the subsidy burden works out to about RM2,300 every second. The monthly total hit RM6 billion in March before climbing to RM7 billion in April, and Nurhisham acknowledged that spending at this rate is not sustainable over the long term.

Why The Supply Crunch Won’t End Quickly

The current oil shock is different from the disruptions Malaysia experienced during COVID-19. The pandemic was driven by weak demand, which meant supply could bounce back once economies reopened. This time, the disruption is on the supply side.

Nurhisham explained that the conflict in the Middle East has led to shutdowns of oil wells across the region. Many were sealed with concrete as a safety measure, and restarting them is expected to take between three and six months, possibly longer depending on the level of damage and whether the security situation stabilises.

During the pandemic, oil supply took up to 18 months to recover. Even with the Strait of Hormuz shipping lane remaining open, restoring the physical flow of crude oil is not as simple as reopening a route. The wells that feed those shipments need to be operational first.

Nurhisham said the country has learned from the pandemic and the Russia-Ukraine conflict, but admitted it is not fully prepared for a prolonged geopolitical or supply crisis. Some sectors and industries, he said, cannot be fully shielded.

What This Means For Prices And Your Daily Costs

Price increases are unavoidable given the external pressures, but the government’s main lever right now is transport costs. By keeping fuel subsidies in place, particularly on diesel, the aim is to prevent a spike in logistics and freight charges from flowing through to the prices you pay for food, groceries, and other everyday goods.

It is not just the price of crude oil driving costs up, either. Nurhisham pointed out that insurance, shipping logistics, and refinery processing costs have all risen alongside crude oil prices.

The government is currently reviewing additional cost-cutting measures, with decisions expected within one to two weeks. Nurhisham also called on the public and businesses to practise energy conservation, saying that individual and industry-level savings on fuel use can help ease the subsidy burden. The government’s three immediate priorities, he said, are controlling cost increases, guaranteeing basic supply, and protecting local industries, including small and medium enterprises (SMEs).

Less Fuel At RM1.99, More At Market Price

From 1 April 2026, the monthly Budi95 quota was reduced from 300 litres to 200 litres per person. The government has described this as a temporary measure, and around 90% of Malaysians use less than 200 litres per month, so most people should not feel an immediate difference at the pump.

If you do use more than 200 litres a month, you will need to top up with unsubsidised RON95, which is currently priced at RM3.87 per litre. E-hailing and gig workers keep their higher quota of 800 litres.

Diesel, which is not subsidised in the same way as RON95, is currently above RM6 per litre in Peninsular Malaysia. Courier charges, delivery fees, and grocery prices are all exposed to that cost.

Fuel prices are updated weekly under the Automatic Pricing Mechanism, so it is worth checking the latest rates every Thursday before you plan your fill-ups.

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