Asia pacific: Asia Pacific (APAC) offshore spending has remained stable following recent geopolitical tensions in West Asia. A significant highlight is the anticipated 12 percent rise in greenfield capital expenditure (capex) within Southeast Asia (SEA), projected to exceed US$100 billion, as reported by Hong Leong Investment Bank Bhd (HLIB).
According to BERNAMA News Agency, the investment bank predicts that brownfield capex will be driven by a 23 percent increase in South Asia and a 3 percent rise in SEA. This suggests ongoing investments in existing assets to maintain short-term supply resilience.
The United States-Iran ceasefire agreement, although still delicate, appears to be moving towards de-escalation. The recent signing of a 14-point memorandum of understanding (MOU) between the US and Iran might signal a possible turning point in West Asian geopolitical tensions.
Traffic along the Strait of Hormuz is reportedly recovering post-MOU, despite understated actual flows. Satellite imagery indicates an increase in vessel transits with Automatic Identification System (AIS) transponders turned off.
HLIB's outlook on the oil and gas sector is based on two key investment themes: resolving energy security issues and higher inventory reserves, which benefit pipeline players and tank terminals. Additionally, a potential capex upcycle by Petroliam Nasional Bhd (Petronas) by 2027 could bolster domestic oil and gas service companies.
HLIB has adjusted its Brent oil price forecast for 2026 down to US$80 per barrel from US$90, maintaining a US$75 per barrel prediction for the upcoming year. The US Energy Information Administration's June report highlights a significant drawdown in OECD commercial inventories, with supply days projected to fall below pre-war levels by late 2026.
Given the current inventory drawdown, HLIB expects oil prices to remain at the US$80 per barrel level until global oil flows normalize. Brent prices could stay above US$75 per barrel into early 2027 if inventory rebuilding extends beyond 60 days of supply, emphasizing stronger energy security measures.
The investment bank also notes that oil prices could receive further support from a longer recovery timeline in production, given that total shut-in volumes in the Strait of Hormuz increased to 45 percent in May 2026 from 35 percent in March 2026.
Meanwhile, IPPFA Sdn Bhd's director of investment strategy and country economist, Mohd Sedek Jantan, observed that Brent and West Texas Intermediate (WTI) crude have dropped from recent peaks, stabilizing around US$70-75 per barrel. If sustained, this price range could provide a more favorable environment for businesses by reducing energy-related costs and enhancing cost certainty.
Stable oil prices within this range could also alleviate global inflationary pressures, bolster business investments, enhance consumer purchasing power, and provide central banks with more leeway to maintain supportive monetary policies, thereby reinforcing global economic recovery, he explained to Bernama.
Currently, Brent has increased by 0.90 percent to US$69.17 per barrel, while WTI has risen by 0.94 percent to US$72.67 per barrel.