Malaysia’s Exposure To US-Iran Conflict Moderate, Manageable — Economist

By Abdul Hamid A Rahman

KUALA LUMPUR, March 3 (Bernama) -- Malaysia has a moderate exposure to the ongoing United States-Iran conflict, and the situation is manageable from a macroeconomic standpoint, supported in part by its position as a net oil and gas exporter, said an economist.

Universiti Teknologi MARA (UiTM) Faculty of Business and Management senior lecturer Dr Rabiatul Munirah said Malaysia has a partial buffer when global oil prices rise, as energy exports contribute significantly to fiscal revenue, particularly through PETRONAS and related upstream activities.

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“However, Malaysia is also a net importer of certain refined petroleum products. It remains integrated into global supply chains. Therefore, higher global energy prices will still filter through the domestic economy,” she told Bernama.

The economics lecturer said Malaysia’s exposure is less about direct bilateral trade links with the US or Iran and more about second-round global spillover effects transmitted through commodity prices, capital flows and investor sentiment.

On sectoral impact, she said if oil prices remain elevated, transportation and logistics, aviation, manufacturing, particularly energy-intensive industries such as chemicals and heavy manufacturing, as well as agriculture, could face cost pressures due to higher fuel and input costs.

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“Higher energy costs could compress margins, particularly for small and medium enterprises with limited pricing power,” she said.

Sectors that may display relative resilience include oil and gas producers, energy-related infrastructure firms, and upstream service providers.

“Companies linked to upstream energy production may benefit from improved margins, while fiscal revenue tied to hydrocarbons could strengthen in the short term.

“However, the overall impact depends on how much of the higher energy cost is absorbed through subsidies as opposed to being passed on to consumers,” she added.

Rabiatul said in the base case, markets tend to treat geopolitical tensions as short-term volatility, particularly if there are no sustained disruptions to global energy supply routes.

“However, if tensions escalate into prolonged supply constraints or broader regional instability, the risks could shift from financial market volatility to real economic effects, including slower global growth and tighter financial conditions.

“For Malaysia, the key risk lies not in the bilateral conflict itself but in the possibility of a sustained global energy shock combined with weaker external demand,” she said.

-- BERNAMA