Malaysia's crude oil supply likely to remain under pressure in 2H25
RHB Research said this decline is moderating compared to previous quarters, indicating some stabilisation due to improved field performance and operational efficiencies, especially in mature fields.
Natural gas production may also contract slightly in the 2H25, primarily due to planned maintenance shutdowns of key facilities in Sarawak and West Malaysia, as well as moderating demand from major liquefied natural gas importers like Japan, China, and South Korea.
RHB Research estimates that the global oil market will narrow its theoretical deficit from 1.5 million barrels per day in 2024 to 0.8 million barrels per day in 2025, mainly due to a moderation in demand growth and higher supply from both the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec producers.
It maintains its 2025 to 2026 Brent crude oil price estimates at US$70 to US$68 per barrel.
Price of Brent crude oil spiked up to as high as US$78 following the escalation of the Israel-Iran conflict, but the gains were quickly reversed on the expected ceasefire.
Its top stock pick for the sector includes Bumi Armada Bhd , MISC Bhd , and Yinson Holdings Bhd . It retains its 'buy' call for the stocks with target prices of 65 sen, RM9.70 and RM3.69 a share, respectively.
While there could be some clarity on the overall landscape in Sarawak, it still expects a structural shift in spending pattern by Petroliam Nasional Bhd, which may not be well replaced by Petroleum Sarawak Bhd, at least in the short and medium term.
Upstream activities are expected to pick up seasonally in the 2Q25 to 3Q25, post monsoon season.
Floating production storage and offloading (FPSO) players are likely to have relatively lower earnings risks under fixed and firm long-term charter contracts.
RHB Research believes clients would not cancel these FPSO contracts due to the fluctuation in oil prices, since these contracts are backed by compensation clauses.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
18 minutes ago
- New Straits Times
China warns Trump on tariffs, threatens retaliation on supply chain deals
BEIJING: China warned the Trump administration on Tuesday against reigniting trade tension by restoring tariffs on its goods next month, and threatened to retaliate against nations that strike deals with the United States to cut China out of supply chains. Washington and Beijing agreed to a trade framework in June that restored a fragile truce, but with many details still unclear, traders and investors on both sides of the Pacific are watching to see if it will unravel or lead to a lasting detente. On Monday, President Donald Trump began notifying trade partners of sharply higher US tariffs from August 1, after he delayed all but 10 per cent of his April duties on most countries to give them time to strike deals with the world's largest economy. China, initially singled out with tariffs exceeding 100 per cent, has until August 12 to reach an agreement with the White House to keep Trump from reinstating additional import curbs imposed during tit-for-tat tariff exchanges in April and May. "One conclusion is abundantly clear: dialogue and cooperation are the only correct path," the official People's Daily said in a commentary, referring to the exchanges in the current round of China-US trade tension. The article was signed "Zhong Sheng", or "Voice of China", a term the paper uses to express views on foreign policy. Reiterating Beijing's view that Trump's tariffs amount to "bullying", the paper added, "Practice has proven that only by firmly upholding principled positions can one truly safeguard one's legitimate rights and interests." The remarks set the stage for another round of tariff war should Trump stick to what the ruling Communist Party's official daily said was "a so-called 'final deadline.'" The average UStariff on Chinese exports now stands at 51.1 per cent, while the average Chinese duty on US goods is 32.6 per cent, with both sides covering all their trade, the Peterson Institute for International Economics said. The paper also took a swipe at regional economies that are considering striking tariff reduction deals with the United States that cut China out of their supply chains. Last week, Vietnam secured a tariff reduction to 20 per cent from 46 per cent with a deal for goods "transshipped" through it, typically originating from China, to be subjected to a levy of 40 per cent. "China firmly opposes any side striking a deal that sacrifices Chinese interests in exchange for tariff concessions," the paper said. "If such a situation arises, China will not accept it and will respond resolutely to protect its legitimate interests."
New Straits Times
19 minutes ago
- New Straits Times
Oil eases as traders assess US tariffs, OPEC+ output hike
SINGAPORE: Oil prices retreated on Tuesday after rising almost 2 per cent in the previous session as investors assessed new developments on US tariffs and a higher-than-expected OPEC+ output hike for August. Brent crude futures dipped 22 cents, or 0.3 per cent, at US$69.36 a barrel by 0330 GMT. US West Texas Intermediate crude fell 27 cents, or 0.4 per cent, at US$67.66 a barrel. US President Donald Trump on Monday began telling trade partners, which included major suppliers South Korea and Japan as well as smaller US. exporters like Serbia, Thailand and Tunisia, that sharply higher US tariffs will start August 1, though he later said that deadline was not 100 per cent firm. Trump's tariffs have prompted uncertainty across the market and concerns they could have a negative effect on the global economy and, consequently, on oil demand. However, there are some signs current demand remains strong, particularly in the US, the world's biggest oil consumer, which has supported prices. A record 72.2 million Americans were projected to travel more than 50 miles (80 km) for Fourth of July vacations, data from travel group AAA showed last week. Investors were bullish heading into the holiday period with data from the US Commodity Futures Trading Commission released on Monday showing money managers raised their net-long futures and options positions in crude oil contracts in the week up to July 1. "Prompt demand remains healthy on the back of seasonal factors. The question remains if forward demand will maintain to absorb the larger-than-expected supply from OPEC+," said Emril Jamil, a senior analyst at LSEG Oil Research. Other signs of higher demand were seen in India, the world's third-largest oil consumer, with government data reporting fuel consumption in June was 1.9 per cent higher than a year ago. On Saturday, the Organisation of the Petroleum Exporting Countries and allies, a group known as OPEC+, agreed to raise production by 548,000 barrels per day in August, exceeding the 411,000-bpd hikes they made for the prior three months. The decision removes nearly all of the 2.2 million-bpd of voluntary cuts the group enacted. They are set to approve an increase of about 550,000 bpd for September when it meets on August 3, according to five sources familiar with the matter, which would unwind all of the cuts. However, actual output increases have been smaller than the announced levels so far and most of the supply has been from Saudi Arabia, analysts said.
New Straits Times
34 minutes ago
- New Straits Times
ChemOne secures US$350mil ICIEC cover for Pengerang project
KUALA LUMPUR: Singapore-headquartered petrochemicals company ChemOne Group has obtained US$350 million in insurance coverage from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) to support the financing of its Pengerang Energy Complex (PEC) in Johor, Malaysia. ChemOne said the insurance cover is designed to facilitate the involvement of Islamic banks in the project's financing, reflecting strong institutional confidence in the PEC's long-term strategic value for the region. ICIEC is a wholly owned subsidiary of the Islamic Development Bank (IsDB). According to the company, the ICIEC insurance cover is structured under a Murabaha financing facility, offering 90 per cent coverage on both the principal and profit. This significantly reduces the risk for the participating Islamic banks, which include the National Bank of Kuwait (NBK), Qatar National Bank (QNB), Al Rajhi Bank Malaysia, and Al Rajhi Bank KSA. "In addition, the IsDB Group, through IsDB and the Islamic Corporation for the Development of the Private Sector (ICD), has reinforced its commitment through a direct investment of US$150 million via Istisna-Ijara structures. "The IsDB Group's total support for PEC, combining direct investments and credit enhancement, now stands at over US$500 million, marking one of the group's most substantial engagements in Southeast Asia," it added. ChemOne chief financial officer Mayank Vishnoi said ICIEC's backing serves as a strong endorsement of PEC's financial robustness and its broad developmental significance. "PEC will drive regional industrial growth, create thousands of jobs, and support regional value chains, all while adhering to global standards for sustainable and responsible financing. "We are honoured to lead one of Asia's most impactful private-sector-led financings," Vishnoi said.
