KUALA LUMPUR, MALAYSIA - MALAYSIA'S top committee on inflation will review the country's mounting fuel subsidies at a meeting on May 27, state Bernama news agency said on Saturday, quoting Deputy Prime Minister Najib Razak.

Malaysia, an oil producer, has some of Asia's lowest petrol and diesel prices, fixing them well below market rates and paying subsidies to fuel retailers to compensate them.

Malaysia's pump price for petrol is 1.92 ringgit (S$0.81) a litre.

But the subsidy bill could hit a whopping 50 billion ringgit (S$21.12 billion) this year as crude oil prices high record highs.

'We have no choice but to review the subsidy because we have reached a stage where the annual subsidy for oil, gas and other essential items has exceeded the (annual) allocation for development,' Mr Najib said in the eastern state of Pahang.

Neighbouring Indonesia cut fuel subsidies on Saturday despite concerns about possible social unrest.

Mr Najib said the cabinet committee on inflation would meet on May 27 to 'discuss the in-depth' the subsidies. Mr Najib will chair the meeting in the absence of Prime Minister Abdullah Ahmad Badawi, whom Najib said would be abroad.

Mr Najib gave no details. But he said the new subsidy scheme would be rolled out in stages and that the poor would benefit more from the subsidies.

The government has said it plans to charge foreigners market prices for petrol while its citizens get subsidised rates at the pump in a bid to manage the hefty subsidy bill.

Domestic Trade and Consumer Affairs Minister Sharir Samad said citizens would have to show their identity cards when filling up at petrol stations to get subsidised prices.

Oil rose on Friday on the weak US dollar and ongoing long-term supply concerns that briefly pushed oil to a peak over $135 this week.

US light crude settled up $1.38 at $132.19 a barrel, after hitting a record $135.09 during intraday trade on Thursday.

High oil prices have hurt demand growth in top consumer the United States, and could curb usage in Asia as well.