An economist has played down the odds of negative effects for Malaysia from the recent energy and fuel crisis in Europe, even as global authorities scrambled to deal with a supply shortage which saw a hike in gas and electricity prices earlier this week.

In Europe, electricity prices reached a record high last month while gas prices soared 600% this year.

Consumers in Spain and Portugal meanwhile are paying €175 (RM845) per megawatt-hour, while in the UK prices surged to €183.84 (RM887) per megawatt-hour.

The global crude oil price on the other hand climbed to a seven-year high at above US$80 (RM332) a barrel.

Speaking to MalaysiaNow, though, Bank Islam chief economist Mohd Afzanizam Abdul Rashid said the European energy crisis would radiate positive effects for Malaysia as it is an exporter of liquefied natural gas (LNG).

“The surge in world gas prices will certainly benefit our oil and gas industry,” he said.

“For example, in July and August, LNG exports recorded significant increases of 69.9% and 110.2% for both months.”

As the economy begins its path to recovery from the Covid-19 pandemic meanwhile, demand for gas is rising on the back of limited supplies.

The Organization of Petroleum Exporting Countries (Opec) and its non-Opec allies agreed last year to cut crude production to 10 million barrels per day. This later dropped to just 5.8 million barrels per day.

Opec has said that production will return to pre-pandemic levels in 2022.

Afzanizam said the imbalance in the commodity market had also spread to other commodities such as coal and crude oil. Rising prices mean that Malaysia, as a major exporter of commodities, would benefit.

However, he also cautioned that this imbalance would have an impact on global inflationary pressure.

“This will be a catalyst for the world’s major central banks such as the US Federal Reserve to raise interest rates next year.

“It will then cause relatively negative sentiment in the stock market following the perception that a rise in interest rate will reduce the momentum of economic growth,” he said.

Economist Yeah Kim Leng meanwhile agreed that Malaysia would suffer only minimal impact from the crisis due to its crude oil and gas supplies.

However, he said the country would eventually have to deal with the negative effects of higher oil prices.

“There will be a knock-on effect of higher fuel prices on production and transport costs that raise inflationary pressures,” Yeah, who lectures at Sunway University, told MalaysiaNow.

“Although the government could cushion the price increases through subsidies, it will likely be partially as full subsidies will be costly and inefficient.”

Yeah said the main concern would be the slowdown in the global economy, which would dampen Malaysia’s economic recovery efforts through trade and investment channels.

But he said that government coffers are expected to improve due to higher oil prices, while national oil firm Petronas is well placed to strengthen its cash flow.