Deputy trade minister: Malaysia’s LNG sector largely unaffected by Middle East tensions

Deputy trade minister: Malaysia’s LNG sector largely unaffected by Middle East tensions

Malaysia’s liquefied natural gas (LNG) sector is expected to remain largely insulated from disruptions caused by escalating geopolitical tensions in the Middle East, according to government officials and industry analysts. Deputy Minister of Investment, Trade, and Industry Sim Tze Tzen highlighted that Malaysia’s trade with Iran—its primary counterpart in the region—accounted for just 2.45 billion ringgit ($620 million), or 0.09% of total trade in 2024, with exchanges limited to non-energy goods such as palm oil, textiles, and natural rubber according to reports. While petroleum and gas trade are technically permitted, import volumes from Iran remain negligible, mitigating direct exposure to regional volatility.

Bank Negara Malaysia has acknowledged heightened risks from prolonged Middle East conflicts, including potential energy price spikes and currency volatility, but emphasized that Malaysia’s diversified trade policy and robust domestic energy reserves provide a buffer according to central bank statements. The central bank maintained its benchmark interest rate at 2.75% amid these uncertainties, citing contained inflationary pressures and a resilient external sector. Separately, Maybank Investment Bank noted that Malaysia’s oil and gas sector could indirectly benefit from Middle East tensions, as global supply disruptions may elevate energy prices and boost demand for stable LNG exporters like Malaysia.

Experts attribute the sector’s resilience to Malaysia’s low reliance on Middle East imports, strategic trade diversification, and strong domestic energy production. While global markets remain wary of spillover effects, Malaysia’s proactive approach to balancing geopolitical risks with economic stability appears to shield its LNG industry from significant near-term impacts.