PETALING JAYA: Despite the ongoing war in Iran, Malaysia is more insulated than its regional peers when it comes to withstanding a surge in oil prices.
Rakuten Trade head of research Kenny Yee said if oil prices remain at around US$100 per barrel, the impact on the local economy would be relatively limited.
“If prices continue to escalate beyond US$120 or even US$200, that’s an entirely different story. But Malaysia is still rather well sheltered from this shock in oil prices,” he said during Rakuten Trade’s Q2 Market Outlook media briefing themed ‘Local but foreign flavoured’ earlier today.
According to Yee, Malaysia’s oil reserves are likely to last until May.
“Hopefully by then, things will be clearer with regard to what’s happening in the Middle East. As for oil and gas stocks, there should be some upside over the short term. But over the longer term, it may be more muted,” he said.
On whether fuel subsidies are likely to be discontinued, Yee said if 2026 turns out to be an election year, as some have speculated, there is unlikely to be any revision to the subsidy.
On a separate note, Yee expects the ringgit to trade between RM3.80 and RM3.90.
“This will be against the reigning US economy, as well as the sell-down of US dollar-denominated assets,” he explained.
For now, there are more headwinds than tailwinds in the US market, particularly its national debt, which stands at about US$39 trillion.
“Tariffs, oil prices, inflation and high interest rates are all potential nano-schemes for the US right now. There are also concerns about the private credit segment, where things are looking a bit shaky,” he said.
Yee added that as inflation is likely to rear its ugly head again, he does not expect any interest rate cuts by the Federal Reserve anytime soon.
