Malaysia Fuel Subsidy Revision Seen as Manageable but Narrows Fiscal Buffer

Petaling Jaya, 2 September 2026 – Malaysia’s decision to restore higher monthly quotas for subsidised RON95 petrol and diesel is expected to have only a limited immediate effect on the national subsidy bill because most eligible users consume well below the maximum allowance. Economists nevertheless warn that expensive crude oil and repeated adjustments could reduce the fiscal buffer supporting the government’s consolidation plans.

The revised allocation for petroleum and diesel subsidies stands at RM40 billion for 2026. One estimate assumes average crude prices of US$80 to US$85 a barrel and expects spending to remain within that provision. Consumption data support a contained central case: only about 1% of registered RON95 users previously exceeded 200 litres a month, while almost 95% of individual diesel recipients used less than 300 litres.