RISING oil prices amid escalating Middle East tensions could add to Malaysia's energy and inflation risks, as Brent crude traded above US$105 a barrel and US benchmark West Texas Intermediate (WTI) topped US$97 on Friday, while the ringgit hovered around RM4.08 against the US dollar.
Brent was on track for a weekly gain, while WTI was set to rise more than 6 per cent for the week, supported by concerns over disrupted oil shipments, record-high tanker rates and a sharp drawdown in US crude inventories.
The US Central Command confirmed that a Singapore-flagged container ship that sank in the Strait of Hormuz earlier this week had been struck by an Iranian projectile, adding to concerns over the security of commercial shipping through the strategic waterway.
The vessel's 21 crew members were safely evacuated, according to Singapore's Maritime and Port Authority.
The Strait of Hormuz is a critical route for global energy supplies, meaning prolonged disruption could tighten physical oil availability and raise transportation and insurance costs, with potential consequences for energy-importing economies across Asia.
Further concerns emerged from rising tensions involving Saudi Arabia and Iran-backed Houthi forces in Yemen, adding to uncertainty over regional oil production and exports.
In a move to ease supply pressures, the International Energy Agency agreed to proceed with the remaining release of 100 million barrels under a coordinated intervention launched in March, following lobbying by US officials.
However, the market remained sensitive to supply developments, with US Energy Information Administration data showing crude inventories fell by 8.6 million barrels last week, the largest weekly decline since February, supporting WTI prices.
WTI was also poised to outperform Brent for the week as lower shipping costs for US crude improved the relative appeal of American barrels.
For Malaysia, sustained increases in global crude prices could raise fuel-import costs and feed into transportation, logistics and production expenses, potentially adding to inflationary pressure if higher energy costs persist.
The impact on consumers, however, would depend on the duration of the oil-price rise, domestic fuel-pricing policies and the extent to which businesses pass on higher costs.
The ringgit traded at about RM4.0822 against the US dollar on Friday, with the local currency having strengthened by around 0.39 per cent over the preceding month, according to market data.
That relative currency strength could help cushion the cost of dollar-denominated imports, including crude oil, but would not fully offset a sustained increase in global oil prices.
Meanwhile, the US Dollar Index retreated from an 18-month high on Thursday as falling Treasury yields weighed on the greenback and Federal Reserve officials signalled caution over the prospect of an imminent interest-rate increase.
Although US producer prices rose at their fastest pace in more than four years, comments from Fed Vice Chair for Supervision Michelle Bowman and San Francisco Fed President Mary Daly suggested policymakers wanted more evidence before deciding on rates at their Oct 27-28 meeting.
Markets are now watching further signals from the Federal Reserve and developments in the Middle East for clues on the direction of the dollar, oil prices and broader financial conditions. - October 16, 2026