THE government could be shelling out up to RM30 billion in fuel subsidy this year as a result of the sharp increase in oil prices, Minister in the Prime Minister’s Department Mustapa Mohamed said today. 

He said it would be more than 170% higher than the RM11 billion it spent last year. 

Speaking at the closing of the Sarawak Oil & Gas, Services and Equipment roadshow in Kuching this afternoon, Mustapha said the national 2022 budget was presented on the assumption that the average Brent crude oil price would be US$66 per barrel. 

But the war in Ukraine and the subsequent sanctions on Russia by the West have led to a lot of uncertainty and volatility in the commodities market, he said.

“The year-to-date Brent crude oil price currently stands around US$106 per barrel – a discrepancy of US$40,” he said. 

Mustapa said despite the hike, the fuel subsidy will continue as oil and gas remain essential drivers of growth and a key pillar of Malaysia’s development agenda. 

Describing the geopolitical situation in eastern Europe as an “even more significant challenge” than the Arab Spring in the early 2010, the plunge in oil prices in 2014 and the Covid-19 pandemic, the oil price spike also highlighted the importance of energy security and self-sufficiency, he said. 

“Energy prices, significantly oil, have spiked to triple-digit levels, putting upward pressure on prices globally. As one of Asia-Pacific’s largest producers and exporters, we are not impervious to these challenges,” he added. – June 23, 2022.