Malaysia cuts BUDI95 subsidy cap to 200 litres from April 2026 as oil prices top US$100

KUALA LUMPUR: The Malaysian government will reduce the monthly BUDI95 fuel subsidy eligibility cap from 300 litres to 200 litres starting April 2026, as Putrajaya moves to contain rising subsidy costs caused by global fuel supply uncertainty and higher crude oil prices.

The announcement was made today by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, who said the MADANI government is taking early and targeted action to make sure the country’s fuel supply remains secure as tensions in West Asia continue to put pressure on global energy markets.

For now, Malaysia’s fuel supply is still under control. But the government says it cannot afford to wait until the situation worsens before stepping in.

That is mainly because the longer-running conflict in West Asia is already affecting the global oil market, with crude prices now climbing past the US$100 per barrel mark. Once that happens, Malaysia’s fuel subsidy bill starts rising very quickly.

In January 2026 alone, subsidies for RON95 and diesel stood at around RM0.7 billion. But the bigger concern is what comes next if oil prices stay elevated.

The government has so far maintained the BUDI95 price at RM1.99 per litre for eligible Malaysians, while targeted diesel users continue to pay RM2.15 per litre. That has helped shield consumers, but it also means the government is absorbing more of the actual market cost.

Two weeks ago, when Brent crude was trading at about US$90 per barrel, petrol and diesel subsidies were already estimated at around RM3 billion a month. Now, with oil prices hitting US$100 per barrel, that monthly subsidy burden is estimated to rise to about RM4 billion.

To manage that pressure, the government is introducing several targeted adjustments under the BUDI MADANI RON95, or BUDI95, and BUDI Diesel programmes.

The biggest change is the lower BUDI95 monthly cap, which will be cut to 200 litres from 300 litres beginning April 2026. The government says this is a temporary move, meant to stay in place until global supply conditions stabilise again.

According to the government, most eligible users are not expected to be affected. It says nearly 90% of qualifying Malaysians use less than 200 litres a month anyway, with average monthly usage sitting at around 100 litres.

Meanwhile, the additional eligibility cap for e-hailing operators will remain unchanged at 800 litres per month.

The government is also stepping up enforcement against subsidy abuse and leakages. The Ministry of Finance said it will not hesitate to revoke BUDI95 eligibility in cases involving misuse or abuse of subsidised RON95.

So while this is not a blanket subsidy rollback, it is clearly a tightening of the system as the government tries to balance public protection with the rising cost of keeping fuel prices low.

The message here is fairly straightforward: fuel supply is still stable for now, but global pressure is building, and Putrajaya wants to act before the situation becomes more expensive or harder to manage.

The government says it will continue monitoring global developments closely and may introduce further measures if needed to keep the country’s energy supply stable.