Malaysia is a net energy exporter. Therefore, the impact of higher oil price on the nation is net positive. High oil prices will translate into better profits for Petroliam Nasional Bhd (PETRONAS), which is wholly owned by the government of Malaysia. Chart 1 tracks the historical oil prices (blue line) versus government income, including PETRONAS’ profits, less subsidy expenses (green line). The blue and green lines move in tandem, that is, higher oil price = higher net income for the nation.
“We will try to control the effects of the Iranian conflict, including for RON95, which is RM1.99 per litre … We can still hold off for one or two months …” This statement from Prime Minister Datuk Seri Anwar Ibrahim must surely be worrying, given that affordability is front and centre for many Malaysian households. To be sure, surging oil price is a problem for the health of the global economy, as underscored by the sell-off in equity markets across the globe since the war in the Middle East started. But Malaysia is a net energy exporter. Shouldn’t the nation also be a net gainer of higher oil prices?
