Iran launched rockets at an Iraqi base which hosts US forces early Wednesday morning in retaliation to a US drone strike last Friday which killed top Iranian general Qasem Soleimani, heightening fears of an all-out conflict between the two countries.

Stating that the US-Iran conflict was discussed during today’s Cabinet meeting, Guan Eng hoped that tension in the Middle East would de-escalate.

“It has just been one day since Iran fired missiles at US bases in Iraq and there has been no response by (US President Donald) Trump yet,” said Guan Eng on the sidelines of the Inland Revenue Board’s “meet the customer” event today.

“We hope both countries can come to their senses and not go to war.

“The biggest challenge facing us will be to maintain economic growth. After all, Malaysia is a net oil exporter,” he added.

Noting that Malaysia has a contingency plan in case the ongoing US-China trade war worsens, Guan Eng was confident a similar plan would be put in place to protect the country’s economy if US-Iran tension worsened.

BBC reported today that Brent crude increased 1.4% to US$69.21 per barrel, and while that may be good for state oil company Petronas and other oil exporters, the price hike means Malaysia has to fork out more on subsidies.

“Many are saying this hike in oil prices cannot be sustained. So far America has not retaliated, so if the conflict ends there I think the oil price will then go back to its previous position,” said Guan Eng, adding that the government’s benchmark was US$62 per barrel.

“For every increase in the oil price by US$1, Petronas will get RM300 million more – but it’s Petronas that will benefit, not the government.

“The government will have to pay higher petrol subsidies, and we are ready for that. So far, the country can manage.”