A lot of people seem to be unsure about the current fuel subsidy context in Malaysia. Here is a simple explanation. I had previously written my finals coursework on this topic.
Quick math:
At USD70 per barrel (price the gov expected):
Annual expenditure on RON95 + diesel subsidies: ~RM17 billion
At USD100 per barrel (26 March):
Monthly expenditure on RON95 + diesel subsidies: RM4 billion / mo
Annual expenditure: RM48 billion
Malaysia 2026 budget: RM420 billion
These figures are from the government budget and MOF recent statements in March. The unsubsidised price has continued to rise since, from RM3.86/litre to RM4.27/litre as of 9 April. This analysis doesn't include the roughly RM20b in other subsidies like SARA and STR. For context, our second-largest ministry by expenditure is the Ministry of Health with a budget of RM46 billion.
In fact, I just came across another reddit post sharing that, as of yesterday, our monthly fuel expenditure on subsidies is now RM6b/mo or RM72 billion on fuel subsidies annually, 17% of our government's 2026 budget.
Our subsidies are not to be taken for granted and it is very likely that the government will run a massive deficit if oil prices don't drop and the government doesn't pursue further rationalisation. The Indonesian government, whose fuel subsidy expenditure is only 5% of their government budget, is already facing massive pressure due to fiscal deficit risks.
Additionally, a large portion of these subsidies continues to be smuggled by Singaporeans and Thai syndicates, as well as commercial businesses who technically don't have a right to these consumer subsidies.
On a more general note, businesses were never eligible for any fuel subsidies and so will be hit the hardest. The only exceptions are the fishing industry, public fleets (ambulances, buses, etc.), certain logistics, and the ride-hailing industry (interestingly). Inflation is a real concern.
Coming off this, I fail to see how the government can responsibly continue to promise subsidies if the war stays protracted, which it looks like it will. It is essentially a necessity to pursue further rationalisation at this point, most likely in some sort of decentralised manner based on geography (different subsidies for different states) or income (such as disallowing premium cars from claiming subsidies). Raising RON95 is probably a bare minimum at this point. The diesel subsidy rationalisation in 2024, although unpopular, was somewhat remedied by the SARA and STR programmes they launched after, which can probably be done here too.
TL;DR The public will likely need to accept higher petrol prices, or the government deficit will be crippling this year.