Briefing MONTHLY #95 | April 2026

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There's nothing like a crisis in one vital waterway to concentrate attention on another. In recent weeks, much discussion has focused on the Strait of Malacca, bordered by Singapore, Malaysia and Indonesia and indirectly by Thailand where its extreme southern tip touches the northern end of the Strait.

Last week, Singapore’s foreign minister, the erudite Vivian Balakrishnan, emphasised the need to keep passage free through the Strait. “The right of transit passage is guaranteed for everyone. We will not participate in any attempts to close or interdict or to impose tolls in our neighbourhood.” As you can read in NEIGHBOURHOOD WATCH, Indonesia’s position on maritime rights is not always so clear cut. Elsewhere, Thailand’s new government has swung behind a land bridge that would allow cargo to bypass the key strait.

Amidst the blanket coverage of the Middle East conflict, it’s worth pausing to consider the momentous news from the International Criminal Court which has confirmed former Philippines President Rodrigo Duterte will stand trial on three counts of crimes against humanity (murder and attempted murder) related to his war on drugs.

Meanwhile the Albanese government's pursuit of an independent foreign policy increasingly seems like code for steering clear of the US President’s inflammatory remarks and focusing closer to home. The Prime Minister has sought to tap into goodwill built up in recent years with Malaysia, Singapore, Brunei and Indonesia. When the crunch is on for oil and fertiliser, the personal touch counts. 

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Emma Connors
Briefing MONTHLY editor

Malaysia and nearby waters are central to two oil supply routes. Both have been hit by the closure of the Strait of Hormuz.

The country is an important regional refiner, importing heavy grades of crude for its local refineries and exporting higher-value, light sweet crude. Australia is its biggest customer. Our two remaining refineries import the majority of their crude oil from Malaysia.

Then there is the shadow oil trade. The maritime zone off eastern Malaysia’s near Indonesia’s Riau Archipelago has for years been one of the busiest informal hubs for vessels engaged in ship‑to‑ship (STS) transfers of Western-sanctioned Iranian crude. These take place outside of Malaysia’s sovereign waters but frequently within its Exclusive Economic Zone. Industry trackers describe a dense offshore choreography: Iranian tankers arrive with transponders switched off, offload to intermediary vessels, and the cargo later appears in China as “Malaysian blend”. Despite periodic enforcement actions, the hub remains a fixture of the global shadow fleet.

In late January, Malaysia’s Maritime Enforcement Agency (MMEA) detained two tankers – Nora and Rcelebra – off Penang for allegedly transferring nearly US$130 million ($180 million) worth of crude without authorisation. Both vessels, along with 53 crew, were released a few days later after a MYR300,000 bond $106,000) was paid. Investigations continue. The agency did not identify the origin of the oil, but the pattern fits the broader Iran‑linked STS ecosystem documented across the region.

This month the MMEA seized two other tankers off Bagan Ajam, along with 800,000 litres of Euro‑5 diesel, most of it believed to have been transferred illicitly. Penang MMEA director Muhammad Suffi Mohd Ramli said the ships were found “in a coupled state and were suspected of carrying out ship-to-ship oil transfer activities without permission.” Authorities arrested 22 crew members from Malaysia, Myanmar, Russia, the Philippines and Indonesia, underscoring the multinational nature of the trade. Officials signalled that patrols would be tightened further.

Meanwhile Kuala Lumpur has leaned on its diplomatic ties with Tehran to help enable fresh supplies of oil to be shipped from Gulf countries. It’s had some success. The Malaysian-owned Ocean Thunder arrived at Sungai Udang on April 20 with one million barrels of crude from Basrah, Iraq. The Liberia-flagged Serifos, carrying crude loaded in South Arabia, arrived the following day.

However, The Wall Street Journal reported five Iran‑linked tankers bound for Malaysia were turned back in mid‑April after the United States warned it may intercept vessels suspected of carrying Iranian crude (a non-paywalled summary of the WSJ report is here). The Suezmax Kariz, carrying around one million barrels, reversed course off Sri Lanka, while the Andromeda, loaded with roughly two million barrels, also diverted. Two empty tankers, Amak and Elisabet, turned back near Hormuz after approaching US Navy vessels.

The Beijing Auto Show has transformed from a trade fair into a victory parade for China’s industrial policy. Running until May 3, it’s the biggest such event in the world, spanning 17 halls with nearly 1500 vehicles on display, virtually all electric. It demonstrates how domestic brands like BYD, Xiaomi and Li Auto are setting the global pace for battery-powered transport. On Anzac Day, BYD wowed the crowds with its electric convertible supercar, the Denza Z. As one commentator noted “1000 horsepower and from zero to 100 in two seconds. The speed of Chinese EV innovation is its own monetary signal.”

China’s march to the top is now being accelerated by external volatility. As the conflict in the Middle East drives crude oil prices above $US100 per barrel, the economic calculus for consumers has shifted. The increased cost of filling up on petrol is making EVs more attractive for many.

BYD's international sales jumped more than 50 per cent in the first three months of this year. Exports accounted for 45 per cent of sales in the quarter, and the company is on track to sell 1.5 million cars overseas in 2026. More broadly across the economy, the oil crisis is a grim validation of Beijing's lengthy, difficult and expensive pivot away from fossil fuel dependency.

However, don’t expect to hear too much about this triumph when the Chinese Communist Party hosts Donald Trump next month. The optics of a dominant, world-beating Chinese EV industry are precisely what fuel the America First rhetoric of 100 per cent tariffs and trade decoupling. For this reason, the CCP is tipped to offer “win-win’’ concessions – increased purchases of US energy as well as agricultural goods. Boeing is hoping to close its largest order in decades.