PUTRAJAYA will continue to fund petrol subsidies despite the increase in global oil prices due to US-Iran tensions, said Finance Minister Lim Guan Eng. 

He said Petronas will also benefit from the higher oil price, but the government would not as it would have to pay higher subsidies.

“For every increase in the oil price by US$1, Petronas will get RM300 million more. It is Petronas that will benefit.

“The government will have to pay higher petrol subsidies. We are ready (for that),” he told the media today after attending the Inland Revenue Board’s Open Day in Kuala Lumpur.

Brent crude oil prices spiked to US$70 per barrel this morning, after it was reported that Iran launched missiles against US military bases in Iraq. This follows the US’ killing of a top Iranian general on Friday.

Since ordering the drone strike that killed Qasem Soleimani, US President Donald Trump has warned of a “major retaliation” if Tehran takes revenge, triggering a sell-off in stocks and a spike in crude prices.

Guan Eng also said the government is hoping that the average price of US$62 per barrel will be maintained throughout the year. 

“Many say this hike in oil price cannot be sustained.

“So far the US has not retaliated. So if the conflict ends there, I think the oil price will then go back to (what it was before),” he said, adding that it is too early to speculate.

“It is a day-by-day development, but so far the country can manage.” – January 8, 2020.