KUALA LUMPUR: The global economy may not yet have felt the full impact of rising oil prices triggered by the Iran–U.S. conflict, according to Khazanah Research Institute chairperson Dr Nungsari Ahmad Radhi.
His remarks came as volatile oil markets rattle governments worldwide, with Brent crude briefly hitting nearly USD120 per barrel amid the conflict before falling to about USD90.
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Nungsari said the deeper economic effects would only appear later as higher oil and gas prices gradually feed through electricity generation, logistics costs, insurance premiums and other parts of the global supply chain.
In an interview with AWANI International, he said this "second-order" transmission from energy prices to the wider economy usually takes time, as households and businesses may only begin to feel the pressure in the coming months.
He added that uncertainty over future energy prices could also disrupt contracts and trade agreements, as investors and traders hesitate to commit when the cost of key inputs remains unclear.
"The seriousness of this issue lies in how widely it affects the economy, because it involves the price of the most fundamental input - energy.
"So we have not seen the worst of it yet," he said.
Malaysia somewhat cushioned
Despite the grim outlook, Nungsari said that Malaysia may be partly insulated from the worst shocks because it produces and exports crude oil and natural gas.
Therefore, he said this provides some flexibility, including the option to adjust exports or rely more on domestic supply during periods of market volatility.
His remarks follow Putrajaya's decision to maintain the price of RON95 petrol at RM1.99 per litre under the BUDI95 subsidy scheme for eligible Malaysians.
Prime Minister Datuk Seri Anwar Ibrahim said Malaysia has sufficient supply to keep the subsidised price in place at least until May.
