This article first appeared in Forum, The Edge Malaysia Weekly on April 13, 2026 - April 19, 2026
The warmongers are at it again, as though the Russia-Ukraine conflict were not enough. This time, the conflict involves the US and Israel against Iran.
The initiator of the war is widely seen as Israel, which is wary of the growing threat of Iran as a superpower in the Middle East and hence feels the need to incapacitate it. While supporting Israel’s mission, the US has additional motives, including annihilating Iran’s nuclear programme, instituting regime change and, of course, capturing oil resources.
Iran has faced an existential threat after numerous onslaughts from Western powers since the overthrow of Mohamad Mosaddegh in 1953 by the US and Britain, the war with Western-backed Iraq (1980-1988) and numerous naval clashes with the US. At the time of writing, the war is in “an escalation phase” from both parties, with destruction being the primary weapon. Each party is strategising with more lethal decapitation strikes, stopping short of nuclear war for now.
Apart from weaponising the conflict, Iran has retaliated with a “military economics” strategy. Iran may not possess nuclear weapons but it holds significant power over the maritime supply chain of oil, gas and their by-products from the Gulf states which pass through the Strait of Hormuz.
The Gulf states — including Saudi Arabia, Kuwait, Bahrain, the UAE, Qatar and Oman — collectively handle a fifth of the world’s oil supply while accounting for three-quarters of oil exports passing through the strait. These market shares are large enough to send shockwaves through the market should disruptions occur.
The strait was closed on Feb 28. Iran knows that closing the strait will strangle her enemies through tight supplies of oil and gas, price hikes and the consequent upheaval it brings, such as inflation and lower economic growth. These consequences amplify Iran’s negotiating leverage in the geopolitical arena.
The Strait of Hormuz is the world’s most important energy choke point. Energy is the lifeline of most economies, whether rich or poor; without it, economic stagnation creeps in. In particular, disruption in energy supplies within the food system may cause a country to plunge into extreme food insecurity. Energy accounts for a significant share of costs across the supply chain, including production, manufacturing, distribution, logistics, shipping and insurance, both locally and internationally.
The unthinkable has already happened. Poor countries with significant petrol and gas trade deficits have suffered the most, especially those that rely on the strait for imports. For instance, Pakistan relies on the strait for 90% of its petrol imports; others include Sri Lanka (43.5%), Nepal (51.4%), Thailand (52.3%) and the Philippines (25.6%). Even rich Asian countries have not been spared. Japan’s oil imports from the strait stand at 75%; South Korea at 68%; and China and Singapore at 50% each.
Countermeasures are already in operation, such as oil rationing, fewer working days, oil export bans and direct government procurement. Remote work is being encouraged and alternative sourcing is being explored. The situation could spiral into chaos if not managed appropriately.
Malaysia is, for the moment, relatively fortunate as an exporter of crude oil but it remains a net importer of petroleum products such as gasoline, diesel, jet fuel, liquefied petroleum gas and kerosene. However, this does not insulate the country from the effects of future price increases.
The turbulent history of the global oil market is unlikely to subside due to its inherent structural instability. Past major crises include the Arab oil embargo (1973), the Iran-Iraq war (1979-1980), the invasion of Kuwait (1990-1991), the global financial crisis (2008), the oil price crash (2014), Covid-19 (2020) and now the US-Israel versus Iran conflict. Therefore, Malaysia must not be complacent.
Past oil crises proved that the first impact on the economy is inflation. The cascading effects of high inflation can be devastating and the feedback loop vicious. When oil prices rise, so too do the costs of fuel, electricity and transport. Businesses often pass these higher costs on to consumers, leading to cost-push inflation.
Everyday goods — from food to clothing — become more expensive. High production costs may lower output in general and higher energy bills leave households with less disposable income, leading to reduced spending on non-essential goods. As consumption and production decline, gross domestic product growth slows, potentially leading to recession.
While Malaysia is an exporter of oil, it is a net importer of fertiliser for its agricultural production. The Strait of Hormuz is a hub of the fertiliser trade, with around 30% of world fertiliser shipped through it. Oil and gas are essential feedstocks used in the production of nitrogen-based fertilisers, potash and phosphate.
The Gulf states are among the largest exporters of urea, thanks to low-cost natural gas feedstock. Malaysia imports key inputs from the Middle East, mainly nitrogen-based fertilisers (urea and ammonia) and phosphates, because they are produced from cheap natural gas and large regional reserves.
A closure will affect Malaysia’s food security through higher oil and fertiliser prices. Energy accounts for a significant share of production costs for crops and livestock, and contributes to a large share of post-farm-gate costs (for example, milling, transport and refrigeration). Higher energy costs lead to food inflation, which hurts affordability for households, particularly the poor.
Note that among all forms of inflation, food price inflation is the most severe and destabilising, capable of sparking famine and political instability. In short, securing food comes before all else.
Alternative scenarios could include high costs of production reducing profit margins, which in turn leads to lower food production and increased imports, widening the country’s food deficit. Some farmers may switch to crops requiring less fertiliser or abandon their farms entirely, leading to the collapse of the industry. The latter has serious repercussions on the country’s food security status. No farmers, no food security.
How can Malaysia make food security future-proof? Given the volatility of the last two decades, targeting food security alone can be a handicap. This is because food production is determined by a combination of input factors beyond Malaysia’s control. Imported fertilisers are a clear example: prices are highly vulnerable to fluctuations in a global market dominated by powerful nations often prone to conflict.
A small economy like Malaysia’s is a price taker with little bargaining power. Moreover, Malaysia’s oil reserves are dwindling; current estimates suggest they may last only about 10 more years at present consumption levels.
Given these scenarios, it is proposed that Malaysia adopt twin policy objectives: food and resource security. While some countries opt for food and energy security, Malaysia’s concept of resource security should include energy, land, water and seeds. These are the major determinants of food security — without them, Malaysia will face acute food shortages.
Each input is crucial. Malaysia should diversify its energy sources to include renewables, nuclear, hydrogen and bioenergy. Organic fertiliser is a vital alternative to chemical fertiliser.
Furthermore, agricultural land is being depleted due to oil palm expansion, industrialisation and urbanisation. Similar pressures affect water resources. As for seeds, Malaysia has yet to fully harness its rich biodiversity, much of which remains untapped and vulnerable. Immediate action is necessary to protect these resources before they are depleted for non-food purposes.
In short, to survive turbulent times, Malaysia must ensure both food and resource security.
Prof Datin Paduka Fatimah Mohamed Arshad is a research fellow at the Laboratory of Agricultural and Food Policy Studies, Institute of Tropical Agriculture and Food Security, Universiti Putra Malaysia
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