According to data released by Malaysia’s Ministry of Finance, the country’s consumption of oil outpaces its daily rate, necessitating imports.
Double the cost
Malaysia’s Ministry of Finance (MoF) released data explaining why Malaysia still depends on oil imports rather than completely relying on its own production. Though Malaysia produces its own crude oil, its production output of 350,000 barrels per day is not enough for the country’s daily consumption. Malaysia consumes around 700,000 barrels of oil per day, double its production output.
According to the MoF, more than half of Malaysia’s oil supply, 52 per cent, is imported. The remaining 48 per cent is produced by Petroliam Nasional Bhd or Petronas. Seven per cent of Malaysia’s supply comes from Southeast Asia, West Africa and other regions. Crude oil from West Asia alone makes up another seven per cent of the country’s supply.
Though Malaysia has its own refineries, its domestic production of crude oil is insufficient, and majority of the oil used in refineries are still imported.
When its exporting crude oil, the country uses a “sell high, buy low” strategy. Malaysia’s crude oil exports are considered premium, but the country imports lower grade crude oil for its own refineries.
Additionally, 38 per cent of the country’s total oil supply is imported through the Strait of Hormuz, which has been closed since 28 February. The strait is also known as “one of the world’s most strategically important chokepoints,” allowing the passage of 20 per cent of the world’s oil supply to pass through when open.
“Nearly 40 per cent of [Malaysia’s] imports pass through the Strait of Hormuz, a major route that is currently affected,” the MoF wrote. The ministry also noted that importing oil is essential to meeting the country’s demand.
The closure of the Strait of Hormuz has caused crude oil prices to rise by nearly 40 per cent. Further price increases across the supply chain may vary, due to the additional costs of logistics and insurance.
While supplies last
According to Prime Minister Datuk Seri Anwar Ibrahim, Petronas is now a “net importer of fuel.” The company announced that one of its vessels, the Ocean Thunder, arrived in Malaysia last 18 April. The Ocean Thunder carried one million barrels of oil from Iraq to steady the country’s oil supply.
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