Goldman Sachs is not always right

Photo by bloomberg

THE headline figure on Goldman Sachs’ prediction of where oil prices are headed is certainly eye-catching. The US-based investment bank predicts a long-term forecast of oil at US$50 per barrel with immediate concerns of it dropping to as low as US$20 next month or in March next year when refineries shut down for maintenance.

It’s unfathomable how Malaysia – a net exporter of oil and gas (O&G) – would be impacted should the price of crude drop to US$20 per barrel. Based on the present fundamentals of the economy, where the O&G and commodities sectors contribute 18% of the nation’s total domestic production, the end result is negative.