SEPTEMBER 14 — The latest surge in oil prices is no longer merely an energy story. It is becoming a test of political stability, economic resilience and strategic discipline across Malaysia and Asean.

Brent crude climbed above US$108 (RM438) a barrel on Monday after drone attacks forced Saudi Arabia to shut its crucial East-West pipeline. 

The pipeline has assumed exceptional importance because it allows Saudi crude to move from the Gulf side of the kingdom to the Red Sea port of Yanbu, bypassing the increasingly constrained Strait of Hormuz. 

The danger is therefore becoming more serious.

West Asia is confronting pressure at several points simultaneously. 

The Strait of Hormuz remains disrupted. The Saudi East-West pipeline has been attacked.

Meanwhile, the Houthis have expanded their position around the Bab al-Mandab, including strategic islands commanding approaches to one of the world’s most important maritime passages. 

These developments matter profoundly to Asean. In Malaysia alone, the energy subsidies of the federal government used to be RM780 million prior to war on February 28, 2026. It’s now RM 11.3 billion a month. 

Prime Minister Datuk Seri Anwar Ibrahim can’t help but seethe from the financial implications of his government. 

Yet he has retained the subsidies to prevent the Malaysian economy from tail spinning into the bottom.

South-east Asia may be geographically removed from the fighting, but economically it sits well within the blast radius.

The first transmission mechanism is energy.

Oil above US$100 a barrel raises transportation, electricity, aviation, manufacturing and logistics costs. 

It eventually feeds into food prices because agriculture, fertilisers, refrigeration and distribution all require energy.

The second transmission mechanism is shipping.

Reuters reports that diverting tankers around Africa can add about 22 days to voyages, while tanker rates have already reached record levels. 

For Asean, one of the world’s most trade-dependent regions, this matters enormously. Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines are deeply integrated into global production networks. 

Higher shipping and insurance costs eventually appear somewhere in the price of intermediate goods or finished products.

The third transmission mechanism is inflation.

If energy prices remain elevated, central banks face an unpleasant choice. 

They can tolerate higher inflation or maintain tighter monetary conditions for longer. Either way, households and businesses feel the consequences.

This is precisely why political stability in Malaysia and Asean must now be treated as an economic asset.

Malaysia has certain advantages. It remains an important oil and gas producer. 

Its energy infrastructure, fiscal instruments and relatively diversified economy provide buffers that several other Asean economies do not possess.

But Malaysia cannot regard itself as insulated.

Higher global crude prices affect domestic fuel subsidies, transportation costs, business margins and government finances. They also influence expectations. 

Once households and businesses begin anticipating persistent inflation, controlling the secondary effects becomes considerably harder.

The unity government therefore needs policy continuity.

This is not the moment for Malaysia to become consumed by endless political manoeuvring, speculative changes of government or campaigns that undermine confidence in national institutions.

Investors confronting geopolitical uncertainty in West Asia will naturally favour countries that appear predictable.

Political stability consequently acquires a monetary value.

The same principle applies across Asean.

Indonesia needs stability to maintain investor confidence and manage its enormous domestic market. 

Thailand requires policy predictability for tourism, manufacturing and exports. Vietnam needs dependable energy supplies to sustain its manufacturing expansion. The Philippines remains particularly exposed to imported fuel costs.

Singapore, despite its formidable financial strength, cannot escape disruptions to shipping, refining and global trade.

Asean therefore faces a common external shock even though its members experience it differently.

This should encourage greater regional coordination rather than economic nationalism.

Asean governments should strengthen energy contingency planning, diversify crude and LNG sourcing, improve strategic stockpiles where appropriate and accelerate regional energy connectivity. 

The Asean Power Grid becomes even more important in such an environment.

But infrastructure alone cannot solve the problem.

Governments must retain public confidence.

When oil prices rise sharply, political narratives can deteriorate quickly. Opposition parties attack governments. Governments search for fiscal buffers.

Consumers become angry about living costs. Businesses delay investment. Social media magnifies every increase at the petrol station or supermarket.

The greatest danger is therefore the interaction between external geopolitical shocks and internal political fragmentation.

Asean cannot control what happens in Iran, Saudi Arabia, Iraq or Yemen. Nor can Asean guarantee freedom of navigation through Hormuz or Bab al-Mandab.

What Asean can control is its own resilience.

Indeed, the attack on Saudi Arabia’s East-West pipeline carries a larger strategic lesson. Diversification itself is vulnerable. 

The pipeline was valuable precisely because it provided an alternative to Hormuz. Once that alternative came under attack, the world’s margin for manoeuvre narrowed considerably.

Markets understand this. That is why Brent moved so quickly above US$108. Earlier this year, oil had already reached about US$126 a barrel before retreating. 

A return towards those levels cannot be dismissed if the West Asian crisis deteriorates further.

Malaysia and Asean should consequently prepare for a prolonged period of expensive energy rather than assume that every spike will rapidly disappear.

Preparation requires sound fiscal management, diversified energy sources, stronger Asean cooperation and carefully targeted assistance to vulnerable households.

Above all, it requires political stability.

Malaysia cannot stabilise the Strait of Hormuz.

Asean cannot determine the military balance in Yemen. Neither can prevent drones from attacking pipelines thousands of kilometres away.

But Malaysia and Asean can ensure that geopolitical instability abroad does not produce political instability at home.

That may prove to be one of the most important economic defences South-east Asia possesses during the difficult final quarter of 2026.

* Phar Kim Beng is a professor of Asean Studies, and director at the Institute of International and Asean Studies, International Islamic University Malaysia.

** This is the personal opinion of the writers or publication and does not necessarily represent the views of Malay Mail.