PETALING JAYA: The Middle East conflict could add RM 1.1 billion to the Malaysian construction industry’s diesel bill in 2026, according to analysis released yesterday by Juwai IQI co-founder and group CEO Kashif Ansari.
He said the conflict has dragged on and occasionally flared up with no permanent settlement reached yet.
“We have to consider the possibility that it could continue on and off throughout the rest of the year. That could add RM1.1 billion to the construction industry’s diesel billion calendar 2026, given the average diesel price since the conflict began.”
Ansari said this is a significant but manageable challenge, and both government and industry are well placed to handle it.
“The higher diesel costs work out to an average of about RM2,000 per new home. That adds a cost the industry can manage, on a sector the country relies on for affordable housing. The encouraging part is that government and industry already have practical ways to keep new housing on track.”
Ansari noted that diesel before the conflict was RM3.04 a litre, in the week of Feb 26, 2026, according to the weekly fuel prices published by Department of Statistics, Malaysia (DoSM).
“Across the 20 weeks since the conflict started, diesel has averaged RM4.80 a litre, an increase of 57.7%.1 At its highest, the price hit RM6.72 in the week of April 9. Malaysia’s construction sector uses an estimated 1.4 billion litres of diesel a year.”
Using DoSM figures, Ansari said they estimate half, or about 740 million litres of that diesel, is bought at the full, unsubsidised market price.
“The construction industry does benefit from subsidised diesel, but few people realise that off-road machinery, such as excavators, cranes, piling rigs and generators, does not qualify and pays the full market price.
“To estimate the possible cost if conflict time diesel prices continue throughout the rest of 2026, we simply applied the 57.7% average increase to the amount of unsubsidised diesel the construction industry will use during that time. The result is a total of about RM1.1 billion in extra cost, or roughly RM25 million a week,” he said.
Ansari said that when the government reformed the diesel subsidy, it kept protections for commercial fleets, so many vehicles are still able to buy diesel at RM2.15 a litre under the Subsidised Diesel Control System (a fleet-card system), well below the market price. The subsidy reform has worked well, saving billions while shielding the vehicles that keep the economy moving.
The government, he added, could build on that success by adding ready-mixed concrete trucks, concrete mixer trucks, and cranes to the subsidised fleet-card scheme. These vehicles are all vital to construction and big users of diesel.
“The government could increase the quotas for contractors in rural and interior areas, given that by definition, they need to drive longer distances and use more fuel. These small and targeted tweaks to the subsidies would close some unfair gaps and help the sector absorb short-term cost increases without passing them on.”
Ansari said about 23% of the activity in the construction sector goes to building homes, and that activity is worth around RM41 billion to the economy, according to DoSM.
“Out of the full RM1.1 billion increase in the cost of construction diesel if the conflict continues until year’s end, I estimate the residential sector’s share would be about RM200 million, lower than its size suggests because home building uses less heavy earthmoving equipment than road and utility work.”
Ansari said that with about 100,000 new homes being started in a year, the estimated RM200 million in extra diesel cost works out to an average of RM2,000 per new home. On a home priced around RM507,000, that’s less than half of 1% of the price.
“On a per-home basis it is small, and across the year it is manageable, though it matters most for builders of affordable housing working on tight margins. The industry can protect itself from higher diesel costs by making sure every one of their vehicles is registered for the appropriate subsidies. Believe it or not, many firms fail to register all their qualifying trucks,” said Ansari.
“You’ll also see more builders insisting on clauses in their contracts that allow them to charge more when fuel prices go too high, rather than having to eat the cost themselves.”
Finally, the industry can work on fuel efficiency.
“They can reduce engine idling, use better routing to reduce their travel distances, and adopt more electric trucks. If the conflict does continue throughout the rest of the year, it could add more than RM1 billion in diesel costs, but government and industry have the tools to absorb itand keep affordable housing on track,” Ansari said.
