The war in the Middle East and its potential effects on Malaysia

By Murray Hunter

The ongoing war in the Middle East has dominated the news since it began with unprovoked attacks on Iran by Israel and the United States on Saturday, February 28.

The first casualty of the war was Iran’s spiritual leader, Ayatollah Ali Khamenei. This indicated that Israel and the US had expected a quick regime decapitation. However, this strategy drastically failed, as citizens very quickly fell behind the government with great patriotism.

Since then, the US and Israel have resorted to indiscriminate bombing of Iranian cities. Within the first hour of US-Israeli attacks, news reports emerged that between 100 and 175 school girls aged between 6 and 12 years were killed at Shajareh Tayyebeh, a sign of what was to come for Iranian civilians. The latest strategy is a quest by the US and Israel to arm the Kurds in northern Iran to create civil war in the country.

The war is now drastically escalating as Iran is undertaking the defence of the nation from an existential threat. The damage and death tolls on both sides are still not clear. What is paramount is that Iranian survival as a culture and nation is at stake.

If you read, watch, and listen to the legacy media, you are being told that Iran is struggling to defend itself from overwhelming attacks by Israeli-US forces. The US Secretary of War Pete Hegseth said in a press conference that the US and Israel now completely control the skies over Iran.

In contrast, the independent media offers a vastly different story. Iran’s military response to initial attacks caught the region off guard and put them into defensive positions across the major gulf and Israeli cities. Iran has quickly spread the conflict to the Gulf region, attacking mostly US military facilities in the United Arab Emirates (UAE), Saudi Arabia (now claimed as a false flag), Qatar, Bahrain, Kuwait, Jordan, Iraq, Oman, and Cyprus, where British forces are on standby. Prime targets in these countries have been US military bases and diplomatic posts, not the people of these cities. There have been reports of locals within Gulf cities cheering when Iranian missiles hit US facilities.

At the time of writing, Iran has tended to utilise the older stocks of its missiles and drones at a conservative rate, saving its modern weapons for later in the conflict. Iran is even firing decoys to run down missile defence systems. The aim here is to force opponents to exhaust their anti-missile resources. 

Iran’s military strategy is clearly to make the world suffer economically, so it costs the United States both financially and diplomatically. We have already witnessed a rise in fuel prices, with Brent Crude now USD 10 above what it was a week ago. Precious metals like gold and silver are on the rise, and there are rumblings in international equity markets. International air transport is massively disrupted, with airfares dramatically rising.

Iran is banking on chaos within international markets becoming an albatross around US President Trump’s head, forcing the US and Israel to retreat. The war is going to be very expensive for the US, and President Trump’s Republicans are facing mid-term elections this coming November and potentially risk losing both houses of Congress. Commentators claim the US is spending USD 1.0 billion per day.

The blocking of the Straits of Hormuz shipping lanes is starting to disrupt the flow of oil to many parts of the world. This is causing panic in many countries where petroleum stocks may last only a month.

The Israeli army is attacking the Iranian ally Hezbollah in Beirut. France and Saudi Arabia announced they are entering the conflict against Iran, where Pakistan has pledged to help Saudi Arabia. If this war continues to escalate around the Gulf region, some pundits are claiming that Gulf family regimes may themselves come under threat. This would be a far greater disturbance to the region than the Arab Spring was back in 2011.

The attack on Iran that happened less than one week ago is now a full Middle Eastern war. If Iran falters, then nations like Türkiye could become future targets of Zionist Israel.

The important issue from where we are geographically is;

How will Malaysia fare during this conflict?

Malaysia, as a Southeast Asian nation with significant ties to global energy markets, trade routes, and the Muslim world, faces a mix of economic opportunities and risks from the ongoing US-Israel-Iran conflict that escalated with coordinated strikes on February 28. While Malaysia has no direct military involvement, the fallout could manifest through indirect channels like commodity prices, supply chains, and geopolitical tensions.

The Malaysian public is already reacting with some concerns about the prices of subsidised RON95 and diesel, with the escalation of the war in the Middle East. Fortunately, being a net exporter, Malaysia is in a good position with oil and gas. There should be some buffer for Malaysia with the disruptions in the Strait of Hormuz and broader Middle East instability. With Brent crude prices expected to rise over USD 100, Petronas should experience more revenue through higher prices, which could boost government revenue. However, on the spending side, the fuel subsidy bill for RON95 could strain the budget in the short term.

Of greater concern will be the effects of the war on the global economy. If global demand decreases and a recession sets in, this could impinge on Malaysian exports. Malaysia will not be immune to global volatilities. Exports are a very important component of GDP growth. Exports make up between 68 and 71 per cent of GDP. The disruption to global supply chains, particularly in semiconductors, petroleum products and palm oil, will be important to watch.

Likewise, a rise in the costs of commodities like wheat, corn, and soybeans could drive up costs for food items, which include bread, poultry feed, and eggs. The cost of transport logistics is set to rise, as they are disrupted by the war. This will have some effect on the cost of living, with a resurgence of inflation. There could be a downward movement in GDP growth later in the year if the war continues.

However, analysts have described Malaysia's potential exposure as "moderate and manageable," but a sustained war could exacerbate these issues. The current signs indicate this conflict will have a protracted time span, increasing the economic consequences to the world, as there is a low probability of any ceasefire in the near future.

The greatest impact upon Malaysia will be the change in the shape of the ‘world order’ emerging after this war. Contrary to the narratives the legacy media are putting forward, US influence in world affairs will decline as Russia and China will rise. Both Russia and China have a respect for the global south, which was not seen under the former US unipolar hegemony. We will also see changes within some of the Gulf states and even a rebalance within the Muslim world that is still too early to define.

The unprovoked US-Israeli attack on Iran was an attack on the global south of which Malaysia is a proud member. This war will be very much a ‘swan song’ for US hegemony over the world. The conflict represents a pathway into a multi-polar world, which Datuk Seri Anwar Ibrahim recognised and embraced with his overtures to Russia and China over the last 3 years. Malaysia's gaining partner status in BRICS was very important. Here lies the future of Malaysia, where the development of BRICS will now accelerate even faster than before.

Malaysia must prepare to be part of this new world order culturally, economically, politically, and socially to gain full benefit. – March 7, 2026

The observations reflect the writer's personal insights and do not necessarily represent the official stance of The Vibes.com