Kuala lumpur: Bank Muamalat Malaysia Bhd's chief economist, Mohd Afzanizam Abdul Rashid, highlighted that policymakers are expected to assess the current situation before deciding on raising interest rates to manage inflation driven by the conflict in West Asia and rising oil prices. According to BERNAMA News Agency, Mohd Afzanizam's comments came in response to suggestions that Bank Negara Malaysia (BNM) should increase rates to curb inflation. Previously, BNM governor Datuk Seri Abdul Rasheed Ghaffour indicated that the central bank is closely observing global developments such as oil prices, potential supply disruptions, and financial market volatility, with plans to release their assessments soon. Mohd Afzanizam emphasized that BNM would likely examine whether current shocks significantly affect growth or inflation. He noted the importance of understanding the root cause of inflation, particularly regarding potential oil supply shortages and the government's subsidy mechanisms. Malaysia, as an oil-pro ducing nation, remains in a relatively stable position with a continued trade surplus in the oil and gas sectors, which reached RM18.2 billion in 2025, up from RM13.2 billion in 2024. This surplus is mainly due to refined petroleum and liquefied natural gas (LNG). Despite this, Mohd Afzanizam suggested reviewing fuel subsidies if the situation persists, proposing that subsidies be targeted based on income level, using existing systems like MyKad to identify eligible recipients. He warned that rising inflation could negatively impact economic growth, as households and businesses might reduce spending. The economist further explained that government spending on fuel subsidies would increase with higher international oil prices. In 2022, Malaysia's petroleum subsidies totalled RM23.1 billion, decreasing to RM19.7 billion in 2024 due to lower average Brent crude prices. Finance Minister II Datuk Seri Amir Hamzah Azizan reported that the government's monthly petrol and diesel subsidies have risen to RM3.2 billi on, reflecting efforts to secure Malaysia's oil supply amid West Asian conflicts. Petroliam Nasional Bhd (Petronas) and other companies continue to seek new supplies to maintain domestic stability. Mohd Afzanizam noted that the potential for de-escalation in the conflict appears minimal, with oil prices likely to remain high. He pointed out that the US has already spent over US$11.3 billion on the war, which could impact upcoming elections in both the US and Israel. He highlighted that geopolitical risks have become more entrenched, leading to market uncertainty. Some economists predict crude oil prices might reach US$200 per barrel, echoing forecasts from the 2008 oil shock. Mohd Afzanizam stressed the importance of energy security and the need to ensure sufficient oil supplies, alongside accelerating renewable energy integration. Recent data from Tenaga Nasional Bhd showed a shift in Malaysia's energy mix, with coal and gas accounting for 92.4% in 2025, while solar and hydro increased to 7.2%. Electric v ehicle (EV) registrations have also surged, indicating progress towards renewable energy, though further acceleration is necessary.