Diesel Has Jumped RM2.50 Per Liter In Six Months. Serious Repercussions. Subsidise Or Pay.

As of the week of March 26 to April 1, 2026, Malaysia has implemented a sharp increase in fuel prices, reflecting both global oil market pressures and ongoing subsidy rationalisation. 

• Diesel prices in Peninsular at RM5.52 per litre.  
• Unsubsidised RON95 is RM3.87 per litre
• Subsidised RON95 remains RM1.99 / litre, cushioning lower-income 
• RON97 has risen to RM5.15 per litre. 
• In Sabah/Swak diesel is RM2.15 per liter.  

• Past six months, diesel prices have climbed dramatically
• Late 2025, diesel at around RM3.00 per litre. 
• About RM3.12 in early March 2026
• Accelerating sharply to RM3.92 and RM4.72 late March 2026
• Latest jump to RM5.52 
• Increase of RM2.50 per litre or 80% within SIX MONTHS

The economic implications of such high diesel prices are significant. Diesel is a key fuel for transportation, logistics, agriculture, and heavy industry. As prices rise, businesses face higher operating and distribution costs, which are typically passed on to consumers. This contributes to cost-push inflation, raising the prices of essential goods such as food and household items.

Higher fuel costs also reduce consumer purchasing power, as households spend more on transportation and necessities, leaving less for discretionary spending. Small and medium enterprises are particularly affected, as tighter margins may lead to reduced hiring, delayed investment, or even business closures in severe cases.

The rapid rise in diesel prices is likely to increase inflationary pressures and slow economic growth momentum.

There has actually been over 80% jump in diesel prices over the past SIX months. There are going to be increase in the prices of just about everything sold in the country. Food prices, fish, vegetables from Camerons, meat prices are all going to go up.  Construction costs are going to go up. 

There is predictable panic in world oil markets arising from the situation in the Persian Gulf. As usual the reaction is knee jerk and overstated. 

But on the ground the oil industry is pessimistic that high oil prices will prevail:

• Despite high oil prices, U.S. drillers are hesitant to ramp up production 
• due to extreme market and geopolitical uncertainty.
• Companies prefer a wait-and-see approach
• Industry fears prices could spike too high, triggering demand destruction 

The number of oil rigs operating in the US and Canada has actually decreased in March 2026. Here are some numbers from Baker Hughes:

The oil traders and speculators are playing up the prices. But the industry is taking a wait and see attitude.

Back to planet earth, the gomen may want to consider subsidising diesel fuel. In Malaysia, once prices go up, they rarely come down. Lets say the war in the Persian Gulf is concluded over the next few weeks and oil prices get back to normal, there is no guarantee that the prices of everything else in the economy will come back down.  It may be cheaper for the economy in the long run for the gomen to subsidise diesel prices.