KUALA LUMPUR (April 3): The Malaysian government will gain RM300 million for every US dollar increase in crude oil price at current levels of US dollar-ringgit exchange rate, said deputy finance minister Datuk Othman Aziz today.

Speaking at the Dewan Rakyat today, Othman, who is also Member of Parliament for Jerlun, pointed to oil revenue for the federal government against a benchmark of oil prices per barrel in 2017.

"In 2017, we had a projection of average crude oil prices at US$50/bbl with estimated revenue of RM24 billion. The full-year average was US$54.4 billion and we collected RM36 billion," said Othman.

This year, he said, the government has projected the full-year average per barrel at US$52, with oil revenue expected to hit RM37.8 billion.

Othman was answering a question by Datuk Seri Ahmad Hamzah [BN-Jasin] on the amount of government's revenue that will increase as a result of the increase in US dollar per barrel in 2017 and 2018.

"In the first quarter of 2018, crude oil price averaged US$66.70 per barrel," added Othman, who explained that it is too soon to make a meaningful projection to the improvement in government revenue this year.

At the time of writing, Benchmark Brent crude was trading at US$67.74/bbl, while the Malaysian ringgit was trading at 3.8675 against the US dollar. The Malaysian ringgit averaged 4.30 against the greenback in 2017.

Othman was also asked whether the federal government is considering putting up a ceiling in retail fuel prices in view of strengthening crude oil prices, and whether oil revenue will be used to stabilise the nation's deficit spending.

Transportation costs, which make up about 15% of the nation's consumer price index (CPI) basket, rose 13.2% on-year in 2017 — the biggest hike among all indices.

Pointing to the co-relation between fuel prices and CPI, he concurred that the increase in oil price will not only affect daily consumers. "The highest usage of diesel falls within commercial industries, such as haulage."

The government, he said, still provides subsidy for the public transportation sector and fishermen, as well as for liquefied petroleum gas.

"[But] the government feels there is no sudden increase in retail prices under the current weekly pricing mechanism," he said.

On Nov 20, 2017, the Ministry of Finance said it will identify measures to reduce the impact of rising oil prices if the retail prices of RON95 petrol and diesel breach RM2.50 per litre for three consecutive months.

At the time of writing, RON95 price was unchanged on-week at RM2.20 per litre, with diesel priced at RM2.18 per litre.

Additionally, Othman said the federal government may prioritise "programmes with high multiplier effects", including infrastructure development projects such as MRT ahead of reducing the nation's deficit spending, which was projected at just over RM20 billion for 2018.

"We need to balance between development projects, the wellbeing of the rakyat and the nation's fiscal policy," said Othman.