Kuala Lumpur, 13 March 2026 – Malaysia’s fuel subsidy bill has surged sharply as global oil prices climb, with the government now spending about RM3.2 billion per month to maintain petrol and diesel subsidies for consumers.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the government remains committed to ensuring Malaysians continue to receive assistance through targeted subsidies under the Budi95 initiative, while keeping petrol and diesel prices stable despite rising global energy costs.
Petrol Subsidies Jump Nearly Threefold
According to the minister, the government’s monthly petrol subsidy has increased significantly to RM2 billion, up from about RM700 million previously, reflecting the impact of higher international crude prices.
Diesel subsidies have also climbed to around RM1.2 billion per month, bringing the total monthly subsidy expenditure for both fuels to RM3.2 billion.
Despite the rising fiscal burden, the government has decided to maintain the subsidy structure in order to cushion households from the impact of volatile global energy markets.
Fiscal Reforms Provide Cushion
Amir Hamzah said Malaysia still has the fiscal space to absorb the higher subsidy costs because of reforms and fiscal consolidation measures implemented by the Madani administration over the past three years.
He emphasised that the government remains focused on balancing fiscal discipline with social protection, particularly during periods of global economic uncertainty and rising commodity prices.
Oil Price Volatility Adds Pressure
Global crude oil prices have surged in recent weeks amid geopolitical tensions in the Middle East, with prices approaching US$100 per barrel. The spike has increased subsidy costs for governments that maintain controlled domestic fuel prices.
Malaysia, which subsidises certain fuel categories, has historically faced rising fiscal pressures when global oil prices climb sharply.
Balancing Fiscal Sustainability and Public Support
Economists note that fuel subsidies remain a sensitive policy issue in Malaysia. While targeted subsidies help protect households from inflation, they also place pressure on government finances if global oil prices remain elevated for extended periods.
For now, authorities say the priority is ensuring that Malaysians continue to receive targeted support while the government manages its fiscal position carefully.
