KUALA LUMPUR - MALAYSIA will cut the petrol price by 5.6 per cent to 2.55 ringgit (S$1.07) a litre due to a drop in global oil prices, Prime Minister Abdullah Ahmad Badawi said on Friday.

The diesel price will also fall by 3.1 per cent to 2.50 ringgit (S$1.05) a litre with effect from Saturday, Mr Abdullah said according to the official Bernama news agency.

The government's announcement comes just three days ahead of a crucial by-election contested by opposition figurehead Anwar Ibrahim in the northern Penang state.

Anwar, who is bidding to return to parliament after a decade-long absence, has promised to cut fuel prices substantially if he wins the poll and later wrests power from the ruling coalition.

The government hiked petrol prices 41 per cent in June to rein in the spiralling cost of energy subsidies.

Mr Abdullah's decision sparked angry street protests and triggered calls for him to quit, compounding his woes after disastrous results in March elections.

The government later said it would review fuel prices periodically from September, with the new price to be fixed on the first day of every month. -- AFP