PIC assets fall R300bn after nearing R4trn mark before Middle East war

Brent crude prices breached the US$102 mark on Friday, after two consecutive days of gains, while the US West Texas Intermediate (WTI) hovered around US$93. The surge in oil prices came as the United States mulls deploying an aircraft carrier and up to 10,000 additional sailors and Marines to the Middle East, raising fears that tensions with Iran could worsen and disrupt regional energy supplies.

Despite Middle Eastern oil flows largely returning to pre-war levels, concerns linger over the durability of these flows, especially following recent attacks on at least three tankers in the Strait of Hormuz. Malaysia faces mounting pressure on fuel costs and inflation, as rising crude prices could complicate the government's management of fuel subsidies and increase expenses across transport and businesses, particularly if higher energy costs fuel inflation.

The weaker Malaysian ringgit exacerbates the situation, as oil is predominantly traded in US dollars. The US Dollar Index hit around 102 on Friday, its peak since March 2025, while the ringgit traded at approximately RM4.0880 per dollar. While higher oil prices could benefit Malaysia as a net exporter of crude oil and petroleum products, the overall impact hinges on production, exports, domestic consumption, and government subsidy policies.

Consequently, markets remain vigilant on developments surrounding Iran and the Strait of Hormuz, as any sustained disruption to a critical oil shipping route could further drive up crude prices.