Kuala lumpur: Malaysian crude grades have continued to command significantly higher premiums over Dated Brent, indicating that the country has been able to partially cushion the impact of lower outright oil prices on revenues.
According to BERNAMA News Agency, RHB Investment Bank Bhd (RHB IB) expects higher oil prices to have a limited adverse impact on Malaysia's growth outlook and only a modest effect on consumer inflation. The bank notes that stronger energy-sector export performance is likely to provide some offsetting support. In its report titled "Malaysia: Strong Bastion Against Fluctuating Oil Prices," RHB IB forecasts that Brent crude prices will decline to US$85 per barrel by the end of 2026 and US$75 per barrel by the end of 2027, assuming a renewed de-escalation of geopolitical tensions.
While falling Brent prices may affect export earnings and government petroleum revenues, the bank suggests that savings from lower subsidies could effectively offset weaker oil-related revenues. It emphasized that the recent widening of Malaysian crude oil differentials highlights the resilience of the country's premium crude export portfolio amid a softer global oil price environment.
The bank explained that although Brent crude prices have significantly dropped from their conflict-driven highs in West Asia, Malaysian crude grades such as Tapis, Kikeh, Kimanis, Cendor, and Dulang continue to command strong premiums. This is attributed to their superior quality, favorable refining yields, and limited availability, allowing Malaysia to preserve a larger share of export value and partially offset the decline in benchmark oil prices.
On the fiscal front, RHB IB's sensitivity analysis suggests that every US$10 per barrel increase in Brent crude prices could raise government revenue by around RM6.5 billion. This would be driven mainly by petroleum-related receipts, including royalties, petroleum income tax, and export duties, which collectively account for approximately RM3.7 billion. The bank also indicated that the key assumption underpinning this increase in government revenue is potential additional upside from higher Petroliam Nasional Bhd (Petronas) dividends, although actual payouts will depend on the company's operational performance and prevailing market conditions.