The government may have to increase fuel prices due to the volatile global oil market, National Economic Planning Minister Mustapa Mohamed said today.

"There is no way we can give a guarantee to anyone (that fuel prices will not be increased)," he told a news conference.

"It is so dynamic, it is so volatile. What more if prices keep on increasing? We can't give a guarantee," he said.

The government has raised petrol and diesel prices three times since last October but prices still remain low compared to neighbouring nations.

Mustapa on Sunday told the Bernama news agency that "the government won't be able to continuously subsidise (fuel) to hold prices down."

He said that a total of 25 percent of the country's revenue came from the profits of national oil firm Petronas and that a large portion of it was being used to fund the fuel subsidies.

Subsidies for petroleum cost Malaysia, a net oil exporter, RM4.8 billion last year. The government has said that it will eventually scrap subsidies.

Oil prices dropped below US$59 a barrel in Asian trade today after Hurricane Dennis, which wreaked havoc in the United States, missed Gulf of Mexico refining facilities, dealers said.