2026 Strait of Hormuz Crisis: Oil Prices Surge, Food Costs Rise - How It Affects Malaysians
•By Shazwan Ismaon
Artikel ini juga tersedia dalam Bahasa Melayu
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Since 28 February 2026, the world has been shaken by military conflict between the United States-Israel and Iran. The joint US-Israel strikes on Iran - including the killing of Supreme Leader Ali Khamenei - have triggered the biggest geopolitical crisis of the decade.
The result? Iran closed the Strait of Hormuz, the world's most important sea lane for oil exports. And Malaysians? We are not spared from this shockwave.
In this article, we will thoroughly examine what the Strait of Hormuz is, what actually happened, how it affects global oil prices, and most importantly - how it impacts food prices, petrol costs, and the cost of living for Malaysians.
The Strait of Hormuz is a narrow sea passage connecting the Persian Gulf to the Arabian Sea. Under normal conditions, according to a Federal Reserve Bank of Dallas report:
When Iran declared the strait "closed" on 4 March 2026, it became the largest energy supply disruption in history - bigger than the 1970s oil crises.
According to estimates from the International Energy Agency (IEA), even if all alternative pipeline capacity were utilised, approximately 16 million barrels per day remain at risk of being stranded. No alternative route can replace this volume quickly.
Here is the chronology of key events you need to know:
| Date | Event |
|---|---|
| 28 Feb 2026 | US & Israel launch military strikes on Iran |
| 4 Mar | Iran declares Strait of Hormuz closed - only Chinese vessels allowed through |
| 8 Mar | Brent crude surpasses USD100/barrel for the first time in 4 years |
| 12 Mar | Iran attacks 21 merchant ships attempting to pass through the strait |
| 19 Mar | US military begins operations to reopen the strait |
| 21 Mar | Trump issues 48-hour ultimatum to Iran - threatens to strike power plants |
| 26 Mar | Iran allows ships from 5 countries (China, Russia, India, Iraq, Pakistan) through the strait |
| 27 Mar | PM Anwar announces Malaysian ships allowed through Strait of Hormuz |
| 30 Mar | Trump postpones strike deadline to 6 April |
As of now, tanker traffic through the strait has dropped over 90%, and oil exports from the Gulf region have fallen by approximately 60%.
The most immediate impact is a surge in crude oil prices unprecedented in the past decade:
| Metric | Value |
|---|---|
| Brent price before conflict | ~USD70/barrel |
| Peak Brent price (Mar 2026) | USD126/barrel |
| Current Brent price | ~USD100/barrel |
Even though 32 countries have released 400 million barrels from strategic reserves, prices remain around USD30 higher than pre-conflict levels. Experts warn prices could reach USD150/barrel if the conflict extends beyond Q2 2026.
This surge happened far more rapidly than any previous conflict. Within just 8 days of the first strikes, Brent had already surpassed the USD100 mark.
This crisis is not just about oil prices. It threatens the entire global economy:
This poses a real risk of stagflation - high inflation occurring simultaneously with slow economic growth. The most frightening economic scenario for any country.
Many ask: "Malaysia has Petronas, so why are we affected?"
The answer is simple but surprising. As explained by SAYS:
In short: Malaysia exports expensive oil and imports cheaper oil from the Gulf for refineries. When the Gulf route is cut off, our refineries suffer.
The government has taken steps to protect citizens through the BUDI95 programme:
| Item | Detail |
|---|---|
| RON95 price (BUDI95) | Maintained at RM1.99/litre |
| Actual unsubsidised price | ~RM3.87/litre |
| Government subsidises the difference | RM1.88/litre per litre |
| Total subsidy burden | Surged to RM4 billion/month (from RM0.7B in January) |
| BUDI95 quota | Reduced from 300L to 200L/month starting 1 April |
For diesel, the unsubsidised price has reached approximately RM5.52/litre, while public transport and logistics still receive subsidised diesel at RM2.15/litre through the Subsidised Diesel Control System (SKDS).
Budget 2026 was prepared assuming oil prices of USD65/barrel. At USD100/barrel, according to analysis by The Edge Malaysia:
In short: the additional revenue is not enough to cover subsidy costs. The government actually loses more despite higher oil prices.
The impact of rising oil prices extends beyond the petrol pump. It seeps through the entire supply chain and ultimately reaches our dinner table.
Here is how crude oil prices affect your food prices:
Every step in this chain adds cost, and ultimately consumers bear the full burden.
Based on reports from RTM and CodeBlue:
| Category | Expected Increase | Reason |
|---|---|---|
| Vegetables | +30% to 50% | Fertiliser costs up 100-150%, farm transport costs |
| Rice | At risk of increase | Malaysia imports rice - sea transport costs rising |
| Chicken & eggs | At risk of increase | Animal feed (corn, soy) depends on imports |
| Cooking oil | Upward pressure | Higher logistics & production costs |
| Restaurant dining | Gradually rising | All raw material + gas + transport costs rising simultaneously |
The chairman of the Cameron Highlands Malay Farmers Association warned that vegetable prices could rise up to 50% temporarily before stabilising at around 30% higher.
This is a fact many are unaware of, and it may be the most concerning medium-term impact:
The most important thing to understand: even if oil prices drop tomorrow, the impact on food prices will persist for several months due to the agricultural cycle. Expensive fertiliser today will produce expensive vegetables 2-3 months from now.
Rising diesel and petrol prices affect nearly every transport sector:
| Sector | Impact |
|---|---|
| Freight lorries | Diesel up - delivery costs rise - shop prices increase |
| P-hailing (Grab, Lalamove) | Rider operating costs rise - possible surcharges or higher fares |
| Buses & public transport | Diesel still subsidised at RM2.15/L, but pressure mounting |
| Aviation | Jet fuel up - flight ticket prices expected to rise |
| E-commerce (Shopee, Lazada) | Courier costs rise - may be passed to consumers |
The government has taken several key measures to shield citizens from the full impact of this crisis:
| Measure | Detail |
|---|---|
| BUDI95 maintained at RM1.99/L | Protects the majority of B40/M40 citizens |
| Public transport diesel at RM2.15/L | Through the Subsidised Diesel Control System (SKDS) |
| BUDI95 quota 200L/month | 90% of citizens use less than this - most are unaffected |
| FOMCA monitoring traders | Enforcement against traders who raise prices unreasonably |
| PM Anwar's diplomacy | Malaysian ships allowed through Strait of Hormuz - diplomatic advantage |
| Petronas as buffer | Government leverages Petronas' global network to find alternative supply |
PM Anwar's announcement that Malaysian ships are allowed through the Strait of Hormuz is a significant diplomatic achievement. This means crude oil supply for Malaysian refineries is not completely cut off, even though costs are higher.
For now, the RON95 BUDI95 price remains at RM1.99/litre. The government is committed to maintaining this price as long as possible. However, the monthly quota has been reduced from 300L to 200L starting 1 April 2026.
Malaysia exports its high-grade crude oil at premium prices but imports around 70% of crude oil from the Persian Gulf for domestic refineries. When the Strait of Hormuz route is disrupted, supply to our refineries is also affected.
Even if oil prices drop tomorrow, the impact on food prices is expected to persist for 2-3 months due to the agricultural cycle. High fertiliser costs today will affect crop prices for several months ahead.
Yes, for most citizens. Data shows the average Malaysian petrol consumption is around 100 litres per month, and nearly 90% of users consume less than 200 litres.
Yes. If the conflict drags on and oil prices reach USD150/barrel, the government may be forced to further reduce the BUDI95 quota or review the subsidy structure. Food prices could also rise by 20-50% overall.
RON97 and diesel do not enjoy the same subsidies as RON95 BUDI95. Both prices have been adjusted upward in line with global market prices. Unsubsidised RON97 is now around RM4.50+/litre while diesel is approximately RM5.52/litre.
Courier and logistics costs rise when diesel prices increase. Courier companies may impose surcharges or raise delivery fees. Ultimately, these costs may be passed on to buyers.
Yes, according to economists and the IEA, the 2026 Strait of Hormuz closure represents the largest energy supply disruption in the history of global oil markets - surpassing the 1973 and 1979 oil crises.
The 2026 Strait of Hormuz crisis is not merely about rising oil prices. It is the largest energy supply disruption in modern history, with effects that seep into every aspect of life - from vegetable prices at the market, Grab rides to work, to the cost of flight tickets home. The government is bearing an enormous burden to protect its citizens, but if this conflict drags on, everyone will feel the impact.
In uncertain economic times like these, it is important to stay informed about current developments and make wise financial decisions.
If you want to understand more deeply how geopolitical situations and the global economy affect your investments and personal finances, the first step is to equip yourself with knowledge.
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