KOPITALK WITH MHO
Malai Hassan Othman
21 March 2026
A War Far Away — But Its Cost Hits Home
What the US-Israel-Iran War Means for Brunei
The images coming out of Iran, Israel, and the Gulf may feel distant — conflicts in faraway lands between powerful nations that have nothing to do with us. That comfort is an illusion. What is unfolding in the Middle East today will arrive at Brunei's doorstep. It will show up in the price of everyday goods at the supermarket, in the electricity bill, in the airfare to visit family abroad — and, most critically, in the fiscal health of a government that has been quietly shouldering a growing burden on behalf of its people for over a decade.
The 2026 US-Israel-Iran war is not just a regional crisis. It is a structural shock to the global economy — and Brunei sits squarely in its path. This column is written not to alarm, but to lay out the realities clearly, as they stand on Day 21 of a conflict that shows no sign of swift resolution.
WHAT IS HAPPENING — AND WHY IT MATTERS
On 28 February 2026, the United States and Israel launched surprise airstrikes on Iran, killing the Supreme Leader and triggering a wave of retaliatory Iranian missile and drone strikes across the region. Gulf states — Bahrain, Qatar, Kuwait, Saudi Arabia, and the UAE — have all been struck. By Day 21, over 1,400 Iranians have been killed, 18,000 civilians injured, and 204 children are dead. Three million Iranians have been displaced.
Iran's response has been to close the Strait of Hormuz — the narrow chokepoint through which roughly 20 million barrels of oil per day, and one-fifth of the world's liquefied natural gas supply, normally passes. That waterway is now effectively shut. The consequences are cascading across the world economy at a pace that should concern every citizen of every small, trade-dependent nation — including ours.
WHAT OUR OWN LEGISLATURE HAS ALREADY HEARD
This war did not go unnoticed in Brunei's own halls of governance. The 22nd Session of the Legislative Council, which opened on 12 March 2026, has already heard two statements that deserve far wider public attention than they have received.
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THE MINISTER OF FOREIGN AFFAIRS II — 22nd LEGCO, 16 MARCH 2026 Speaking during the Supply Bill debate, the Minister of Foreign Affairs II did not confine himself to diplomatic pleasantries. He named the war. He stated Brunei's formal condemnation of the military actions against the Islamic Republic of Iran. He confirmed that retaliatory strikes had extended to Iran's neighbours — and that he had personally contacted the foreign ministers of seven countries in the days that followed: Oman, Qatar, Kuwait, Bahrain, Saudi Arabia, Jordan, and the UAE, to convey Brunei's deep concern and solidarity. "As of today, 760 Bruneian nationals are currently in the Middle East region. They have been advised to remain vigilant and take all necessary precautions. The ministry is monitoring the situation." For the families of those 760 people — workers in the Gulf, students in Jordan, Bruneians on Umrah — that was not a foreign policy statement. That was personal. It was the sound of a government saying to its people: we know where your loved ones are, and we are watching. |
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THE 2ND MINISTER OF FINANCE AND ECONOMY — 22nd LEGCO, 14 MARCH 2026 Yang Berhormat Dato Seri Setia Dr Haji Mohd Amin Liew bin Abdullah, presenting the BND6.3 billion Supply Bill for FY 2026/2027, was direct about Brunei's fiscal exposure to external shocks:"Global economic uncertainties — influenced by geopolitical tensions in the Middle East, changes in global trade structures, moderate global growth prospects and the challenges of climate change — require the government to adopt cautious and strategic measures while ensuring the nation maintains macroeconomic stability and fiscal resilience."He further confirmed that subsidies on rice and fuel will be maintained — a commitment made against a projected deficit of BND2.72 billion, with oil and gas revenue already fallen from BND1.93 billion to BND1.499 billion. These were pre-war figures. The Iran war has since made an already precarious fiscal position considerably more so. |
Both statements, taken together, tell us something important: the government is alert to what is happening. The question worth pressing — and that I raise here as a matter of public interest — is whether that alertness will translate into the kind of open, substantive debate that the moment demands.
THE CASE FOR A LEGCO DEBATE
The titah at the opening of the 22nd LegCo Session was clear in its intent: the annual sitting should serve not merely as a formal gathering, but as an important platform for constructive dialogue and the discussion of real issues affecting the nation and its people. It is difficult to think of a more real or more pressing issue than the economic and fiscal impact of an active war on Brunei's primary export market, energy infrastructure, and supply chains.
There are questions the public is entitled to have answered — on the
floor of the chamber, on the record:
• What is the projected additional cost to the fuel
subsidy budget for every month that Brent crude remains above US$100 per barrel
— and how long can that cost be absorbed before policy must change?
• What contingency measures exist for Brunei's strategic
food reserves and supply chains should the Strait of Hormuz remain disrupted
beyond weeks into months?
• What is the threshold — in oil price, in deficit
figure, in reserve depletion — that would compel a formal review of the subsidy
regime?
• What evacuation protocols are in place for the 760
Bruneian nationals currently in the Middle East, should the conflict escalate
further?
• Given that the FY 2026/2027 budget was formulated before this conflict erupted, does the government intend to table a supplementary budget or revised fiscal framework reflecting the changed global reality?
These are not hostile questions. They are the questions a responsible legislature asks — and that a well-informed public deserves to hear answered.
THE HIDDEN PRESSURE: SUBSIDIES AND A DECADE OF DEFICITS
Here is what many Bruneians may not immediately grasp: the fact that petrol prices at the pump have not changed is not evidence that Brunei is insulated from this shock. It is evidence that the government is absorbing the shock on the public's behalf — and doing so from a fiscal position that was already under strain before the first missile was fired.
When global crude prices spike to $110 or $120 per barrel, every litre of subsidised fuel sold in Brunei below market rate is a litre the government pays for out of its own pocket. As global prices soar, that pocket grows heavier by the day — and it is a pocket that has been running on deficit for over a decade.
The numbers are worth stating plainly. Brunei recorded budget shortfalls in seven of the past ten financial years. The FY 2026/2027 deficit is projected at BND2.72 billion — before the war. The consolidated fiscal deficit stood at 13.3% of GDP in 2024. Oil and gas revenues — which account for 75% of government income — have been falling. The subsidy budget was calibrated against oil at around US$80 per barrel. Brent crude is now trading above $100 and Goldman Sachs warns it may stay there through 2027.
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BRUNEI'S FISCAL POSITION — THE NUMBERS •
Budget deficit in 7 of
the past 10 financial years — structural, not cyclical • FY 2026/2027 projected
deficit: BND2.72 billion — a pre-war estimate • Fiscal deficit: 13.3% of GDP (2024), worsening year on year • Oil and gas revenue:
down from BND1.93 billion to BND1.499 billion — pre-war • Subsidy budget
calibrated at ~US$80/barrel — Brent now above $100 • Deficits financed from finite fiscal reserves — not external borrowing, but not unlimited |
The pump price may not change tomorrow. But every day it stays artificially low while global prices remain elevated, Brunei's government is paying the difference out of a wallet that has been getting thinner for a decade. That is a cost that will eventually come home — one way or another.
THE WIDER REACH OF THIS WAR
The fiscal pressure is the least visible impact. The others are more
immediate.
•
Food prices will rise. Brunei
imports over 90% of its food. Higher fuel costs mean higher shipping,
refrigeration, fertiliser, and agricultural input costs. Global wheat prices
have already moved. The food on your table is getting more expensive to bring
here.
• Supply chains are
fracturing. Petrochemical companies across Asia have declared force
majeure. Refineries in Singapore and Malaysia have cut output. Around 20,000
seafarers are stranded in the Gulf. Consumer goods, spare parts, and
electronics will all be affected.
• Air travel is costlier
and disrupted. Middle Eastern airspace is closed. Airlines are
rerouting flights, adding hours and fuel costs to every journey. Jet fuel
prices have more than doubled. For Bruneians with family abroad, students
overseas, or workers in transit, this is an immediate out-of-pocket reality.
• Our ASEAN neighbours are already in crisis mode. The Philippines has moved to a four-day government work week. Thailand has banned oil exports. Vietnam is drawing down its fuel stabilisation fund. Indonesia faces a budget deficit breach. When our trading partners and regional neighbours slow down, Brunei does not remain untouched.
THE STRUCTURAL VULNERABILITY THIS CRISIS EXPOSES
This crisis did not create Brunei's vulnerabilities. It merely exposed them — again.
A war in the Middle East should not be able to threaten the food security or fiscal stability of a nation endowed with oil, gas, and abundant natural resources. And yet, here we are. Over 90% food import dependency. A structural budget deficit that has persisted for more than a decade. An economy overwhelmingly reliant on hydrocarbon revenues. A subsidy regime calibrated against oil prices that no longer reflect reality. These are not acts of God. They are policy outcomes, accumulated through years of deferred reform.
The 2nd Minister of Finance and Economy has himself framed the current budget under the theme: 'Together Achieving Wawasan Brunei 2035' — describing this as the decisive final decade that will shape the country's direction. He is right. But a decisive decade demands decisive action — not merely prudent management of an existing trajectory that, by the government's own admission, is fiscally unsustainable. The urgency of genuine economic diversification, food security investment, and structural reform has never been clearer than it is today.
WHAT BRUNEIANS CAN DO IN THE MEANTIME
While the guns fire elsewhere, there are practical things every household and every citizen can do:
• Plan ahead financially. The
cost of living will be higher in the weeks and months ahead. Plan your
household budget accordingly. Avoid panic buying — it inflates the very prices
you are trying to escape.
• Use fuel wisely. Consolidate
trips, carpool where possible. Every litre saved is one less litre the
government subsidises from already strained reserves.
• Buy local. Support
locally grown food and local businesses. Community resilience is built one
purchase at a time, not only through government policy.
• Verify before sharing. Misinformation
during a crisis amplifies panic and causes real harm. The situation is serious
enough without exaggeration.
• Ask questions of those in authority. What are the contingency plans? What are the strategic reserves? What happens to subsidies if oil stays above $100 into 2027? What is the plan for Bruneians stranded or at risk in the Middle East? A government that is asked good questions gives better answers.
Small nations do not start these fires. But we can be burned by them — especially when we have spent years deferring the reforms that would make us more resilient. The war in the Middle East is a tragedy for those living it. For Brunei, it is also a mirror. What we see in that mirror should prompt not just concern, but action.
The pump price may hold today. The harder question — the one that belongs in the Legislative Council chamber and in every serious public conversation — is: for how long, and at what cost to tomorrow?
May Allah protect our nation, guide our leaders with wisdom, and grant patience and resilience to our people in these uncertain times.
Malai Hassan Othman is a journalist, columnist, political advisor, and Chairman of the NDP Advisory Board. He writes the KopiTalk with MHO column.


