Diesel is not usually the first thing homebuyers worry about. But perhaps it should be.
The ongoing West Asia conflict involving the United States, Israel and Iran could add around RM1.1 billion to Malaysia’s construction diesel costs in 2026. The analysis, released by Juwai IQI Co-Founder and Group CEO Kashif Ansari on 21 July 2026, was reported by several Malaysian media outlets, including The Star, theSun and The Malaysian Reserve.
Here is what the figures reveal, and what rising diesel and construction costs could mean for anyone planning to buy a home in Malaysia.
How Much Extra Could This Cost?
According to weekly fuel price data from the Department of Statistics Malaysia (DOSM), diesel was priced at RM3.04 per litre in the week of 26 February 2026, before the conflict began.
Over the following 20 weeks, the average diesel price increased to RM4.80 per litre, representing a 57.7% rise. Diesel prices reached their highest level at RM6.72 per litre during the week of 9 April 2026.
Malaysia’s construction sector is estimated to consume about 1.4 billion litres of diesel annually. However, approximately 740 million litres, or more than half of that amount, are purchased at the full unsubsidised market price because most off-road construction machinery is not eligible for subsidised diesel.
The conflict has dragged on and occasionally flared up with no permanent settlement yet reached. 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 bill in calendar 2026
Kashif Ansari, Co-Founder and Group CEO, Juwai IQI
| Metric | Figure |
|---|---|
| Pre-conflict diesel price (DOSM, 26 Feb 2026) | RM3.04/litre |
| Average diesel price since conflict (20 weeks) | RM4.80/litre |
| Price increase | 57.7% |
| Peak diesel price (week of 9 April 2026) | RM6.72/litre |
| Annual construction diesel usage | ~1.4 billion litres |
| Estimated unsubsidised portion | ~740 million litres |
| Projected extra cost for 2026 | ~RM1.1 billion |
| Extra cost per week | ~RM25 million |
| Residential sector’s share | ~RM200 million |
| Extra cost per new home | ~RM2,000 (<0.5% of price) |
Source: Juwai IQI analysis based on DOSM weekly fuel price data.
Why Homes Are Hit Less Than Roads
According to DOSM, residential construction accounts for about 23% of Malaysia’s total construction activity, contributing approximately RM41 billion to the economy. However, its share of the diesel cost increase is smaller than this figure may suggest.
As Kashif explained, home construction typically relies less on heavy earthmoving machinery than infrastructure projects such as roads and utilities. Of the estimated RM1.1 billion increase in construction diesel costs, the residential sector is expected to account for around RM200 million.
With approximately 100,000 new homes beginning construction each year, this works out to an average additional diesel cost of about RM2,000 per home. For a property priced at around RM507,000, that represents less than 0.5% of the purchase price.
Wondering what a home in Malaysia really costs beyond the sticker price? See the full breakdown of the real cost of buying a house.
What Can Be Done About It?
The government’s diesel subsidy reform has worked well overall. Under the SKDS fleet-card system, eligible commercial vehicles still buy diesel at RM2.15 per litre, well below market price. But off-road machinery, the backbone of every construction site, pays full price.
The government 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 also increase the quotas for contractors in rural and interior areas, given that by definition, they need to drive longer distances and use more fuel.
Kashif Ansari, Co-Founder and Group CEO, Juwai IQI
From an industry perspective, Kashif noted that some companies fail to register all eligible trucks under the diesel subsidy programme, causing them to pay more for fuel than necessary.
Builders are also increasingly including fuel price escalation clauses in their contracts. These clauses allow higher fuel costs to be shared rather than absorbed entirely by the contractor.
In the longer term, construction companies can reduce fuel consumption by limiting unnecessary engine idling, planning more efficient transport routes and gradually adopting electric trucks where practical.
What This Means for Homebuyers and Investors
An estimated RM2,000 increase in diesel-related construction costs per new home is noticeable, but it is unlikely to have a major impact on affordability by itself. For comparison, the additional costs of buying a first home, including legal fees, stamp duty and loan-related expenses, can reach tens of thousands of ringgit.
For buyers considering new property launches, the main thing to watch is pricing in future phases. Homes that have already been sold at prices stated in signed Sale and Purchase Agreements are generally protected from later price changes. However, developers may factor higher construction and fuel costs into upcoming launches.
Our complete 2026 homebuying guide explains the other costs buyers should prepare for, including financing, stamp duty and legal fees.
For subsale buyers, the impact is less direct. However, if new launch prices continue to rise, more buyers may turn to the resale market for better value. This could strengthen demand for well-located subsale homes, particularly in markets where average prices are already increasing.
Investors should also monitor the supply pipeline. Prolonged increases in construction costs could delay project launches or reduce the number of new homes entering the market. Tighter supply may support rental demand and property values in selected locations, although performance will still depend on factors such as connectivity, affordability and local demand.
First-time buyers should not assume that homeownership is out of reach. Malaysia’s affordable housing initiatives and government-supported housing schemes for B40 and M40 households remain available to eligible applicants.
Juwai IQI Co-Founder and Group CEO Kashif Ansari’s analysis on how the West Asia conflict could add RM1.1 billion to Malaysia’s construction diesel bill in 2026 was featured in The Star, TheSun and The Malaysian Reserve.
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