Dr M: Govt subsidy will cushion any oil price rise

Smoke billows from an Aramco facility in Abqaiq, Saudi Arabia, one of two attacked by Yemeni rebels using drones. (Reuters pic)

PUTRAJAYA: Government subsidies of fuel prices will offset any increase in world oil prices caused by disruption to Saudi Arabian oil production, Dr Mahathir Mohamad said.

The Saudi state-owned Aramco petroleum company suspended production at two major oil facilities after drone attacks by Yemeni rebels yesterday.

Mahathir said the production suspension would definitely have an impact on global oil prices. However, Malaysia practices intervention through a subsidy to offset higher prices.

“If Saudi Arabia has to stop refined oil production by one million barrels (per day), it will definitely impact the global oil prices. In Malaysia, when oil price rises, we will give a subsidy unlike in the United Kingdom, if the price of oil soars, the government will raise the tax and the people don’t complain,” he said at a press conference here.

The retail price of RON95 petrol is currently RM2.08.

Aramco said today the drone attacks “had resulted in production suspension of 5.7 million barrels of crude oil per day”.

The attacks at Abqaiq and Khurais were the latest incidents of aggression on Saudi oil facilities in recent months. Iran-linked Huthi rebels said they launched “a large-scale operation involving 10 drones on the facilities, the group’s Al-Masirah television reported.