KUALA LUMPUR, March 17 — Heightened geopolitical uncertainty surrounding developments in the Strait of Hormuz could influence global capital flows, with commodity-exporting economies such as Malaysia potentially better positioned amid rising energy prices.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said rising geopolitical tension often prompts investors and traders to adopt a risk-off stance.
“At times of heightened uncertainty, traders and investors would seek shelter in safe-haven assets or even would like to park their money or investment principles in the money market instruments or instruments that remain highly liquid.
“Perhaps, Malaysia is in a better situation, where in terms of our balance of trade with regards to the oil and gas (O&G) sector, the country remains a net exporter,” he told Bernama.
The development follows multiple reports that Iran has allowed shipments through the Strait of Hormuz traded in Chinese yuan, a move financial markets are closely monitoring, given the waterway’s strategic role in global energy supply.
It was reported that Iran allowed the first non-Iranian oil tanker, an Aframax-class vessel named Karachi carrying Das crude from Abu Dhabi, to safely pass through the Strait of Hormuz with its automatic identification system activated on March 16 after the shipment was paid for in Chinese yuan, and it is currently on its way to Pakistan.
Malaysia’s commodity position offers a buffer
For instance, he said, if one looks at the balance of trade for 2025 in the O&G sector, Malaysia actually recorded a surplus of RM18.2 billion in 2025, compared to RM13.1 billion in 2024, supported mainly by surpluses in refined petroleum and liquefied natural gas (LNG).
“So, these are the two products that really help in terms of increasing our trade balance in terms of the O&G trade surplus balance,” he added.
Nonetheless, Mohd Afzanizam said, the situation in the Straight of Hormuz remains uncertain, especially regarding how this war may be concluded and whether de-escalation is possible, which is what the market is hoping for.
“But I think at the current juncture, it seems a very tall order for such expectation to materialise. And again, because of the nature of our economy, (as a) net oil exporter, perhaps we are in a better position.
“That could really explain why our ringgit (versus the greenback) continues to hover below RM4. And now, I think it is hovering around RM3.93-RM3.92 per US dollar,” he said.
However, the economist cautioned that rising oil prices could have fiscal implications, particularly through increased fuel subsidy commitments.
He said any price appreciation will directly impact the cost of fuel subsidies, as Malaysia still imports refined petroleum products for domestic consumption.
“The government has actually come up with some estimates that at the current rate, the petroleum subsidies are about RM2 billion per month, and for diesel, they are about RM1.2 billion. That is quite a substantial amount of subsidy money.
“And therefore, (given) the current or the prevailing situations with regard to the Iranian war, perhaps there is a need for the government to re-examine or review the current subsidy structure,” he said.
Energy shock, market risks remain
Meanwhile, IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said disruptions involving the Strait of Hormuz are currently being interpreted primarily as a trade-corridor shock rather than a systemic financial event.
“In macroeconomic terms, disruptions in strategic shipping routes transmit through energy availability, transport costs and commodity pricing before reaching financial markets.
“That means emerging market currencies are unlikely to be the first channel of stress. Foreign exchange volatility would more likely emerge only if the shock becomes persistent enough to influence inflation expectations, global interest-rate trajectories and external balances,” he said.
He added that the real risk for financial markets is not the geopolitical tension itself, but the possibility that a prolonged disruption could allow energy inflation to re-enter the global macroeconomic cycle.
Mohd Sedek further highlighted that the broader implication could be viewed largely as an Asian energy security shock, given that much of the crude oil and LNG passing through the Strait of Hormuz ultimately supplies Asian economies.
“That means the inflationary and growth effects are likely to be transmitted first through Asia’s energy import costs before spilling into global financial markets,” he said.
From a market perspective, Berjaya Research Sdn Bhd head of research Kenneth Leong said global markets have already begun to reflect heightened geopolitical risks.
“Closure of the Strait of Hormuz has resulted in a spike in oil prices and freight rates, while global markets have retreated from recent highs, with the Dow Jones retreating from around 50,000 points to about 46,600 recently.
“At the same time, global markets have also taken a beating since late February 2026,” he said.
Leong said that, under prevailing uncertainty, the US dollar, which is positioned as the world’s primary reserve currency due to its strong stability and liquidity, has recently reclaimed the 100 level (US dollar index).
“Should tensions escalate, oil prices may continue to spike higher, and this could benefit O&G upstream producers.
“Re-routing of shipping routes (alternative routes) could also benefit port operators in anticipation of increased transhipment volumes,” he added.
At the same time, Leong said higher crude oil prices, currently trading above US$100 per barrel (US$1=RM3.91), could strengthen Malaysia’s fiscal position through higher petroleum income tax collections and dividends from Petroliam Nasional Bhd (Petronas).
“However, the impact could be (offset) by higher subsidies from fuel and electricity, which may make the government’s 2026 fiscal deficit target less achievable.
“Along with the stronger US dollar as noted earlier, this could result in a flight of foreign funds out of emerging markets, including Malaysia,” he said.
