VOLATILE global oil prices continue to cloud Malaysia’s fuel cost outlook, with renewed supply risks threatening to increase pressure on transport, businesses and government subsidy spending despite a slight strengthening of the ringgit against the US dollar.
Brent crude steadied near US$109 a barrel and West Texas Intermediate (WTI) near US$98 on Wednesday after prices fell sharply in the previous session amid hopes of progress towards ending the US-Iran conflict.
The uncertain diplomatic outlook, however, has limited confidence in a sustained decline in oil prices, with investors weighing ongoing negotiations against escalating regional hostilities and threats to shipping through the Strait of Hormuz.
The ringgit edged up 0.02 per cent to 4.0823 against the US dollar on Wednesday, while the US Dollar Index slipped to 101.78.
A stronger ringgit can help moderate the cost of importing oil and petroleum products priced in US dollars, although the extent of any relief depends on the duration of the currency movement, global benchmark prices and domestic fuel pricing policies.
For Malaysia, sustained oil price volatility also has implications for transport and logistics operators, manufacturers and other businesses exposed to fuel and energy costs. Higher operating expenses could eventually feed into prices of goods and services if businesses pass on the additional costs.
The government’s exposure also depends on global prices, the exchange rate and the cost of maintaining subsidised fuel for eligible consumers and sectors.
Oil prices have risen by more than 10 per cent this month amid intensifying hostilities involving Saudi Arabia and Iran-backed Houthi forces, alongside the Russia-Ukraine conflict, which have heightened concerns over energy supplies.
At least 18 vessels have come under attack in the Strait of Hormuz over the past two weeks, adding to concerns over disruptions to a critical route for global oil shipments.
Despite the risks, oil flows from the Middle East have recovered to about 80 per cent of prewar levels, providing some relief to supply conditions.
Prices dropped on Tuesday after Pakistan’s army chief, Field Marshal Asim Munir, met senior Iranian diplomatic and military officials in Tehran to discuss bilateral relations and negotiations with Washington.
However, a diplomat involved in the discussions dismissed reports that a deal was imminent, while confirming that efforts to end the conflict were continuing.
Separately, the US dollar has weakened amid concerns over the economic outlook and disappointing US housing data. Housing starts fell 5.2 per cent in September, while pending home sales dropped to a record low.
The US Federal Reserve is widely expected to leave interest rates unchanged at its meeting next week, although markets are anticipating a possible 25-basis-point increase in December. - October 21, 2026