PETALING JAYA: Oil and gas (O&G) companies are expected to accelerate low-cost production enhancement initiatives as the global oil market remains tight.
This includes prioritising quick-win projects such as well optimisation and incremental output improvements, according to BIMB Securities Research.
In a note, the research house also said industry players may defer non-critical maintenance and planned shutdowns to capitalise on stronger realised prices.
Speaking with StarBiz, a fund manager echoed a similar view.
“The high oil price environment for the next few months will provide more flexibility for industry players.
“Even after the Strait of Hormuz is fully reopened, it would take a few months for oil prices to stabilise and return to original levels,” he said.
BIMB Securities Research has forecast Brent crude to average US$90 per barrel for the remainder of the year.
It also expects oil production and flows through the Strait of Hormuz to normalise only from the third quarter of 2026 (3Q26).
The oil market has entered a tight supply phase, driven by ongoing disruptions and a sharp drawdown in inventories.
“We estimate global inventories have declined by 400 million barrels over the past 40 days, based on a drawdown rate of 10 million barrels per day.
“While conditions remain fragile, recent developments – particularly the ceasefire agreement between the United States and Iran – suggest that the market is transitioning away from a worst-case trajectory.
“That said, the system remains structurally tight, and prices will continue to reflect a meaningful geopolitical risk premium,” stated BIMB Securities Research.
The research house added that facility-level disruptions and operational bottlenecks will continue to weigh on recovery timelines.
Overall, it has revised its 2026 Brent forecast upward to a range of US$76 to US$85 per barrel, reflecting a higher pricing environment amid ongoing supply tightness.
This incorporates a year-to-date average of US$80 per barrel, elevated prices in 2Q26 driven by supply disruptions, and a gradual normalisation in the second half of 2026 as production and export flows recover.
On a quarterly basis, Brent is forecast at US$100 per barrel in 2Q26, easing to US$90 in 3Q26 and US$80 in 4Q26.
For 2027, it assumes further normalisation to US$75 per barrel, broadly in line with pre-conflict levels.
“From a positioning standpoint, we think well-related service players, particularly T7 Global Bhd
and Uzma Bhd, will benefit from increased activity in well workovers and production optimisation.
“These segments typically see faster mobilisation and execution during periods of high oil prices, as operators seek immediate volume uplift.
“In contrast, maintenance-focused players such as Dayang Enterprise Holdings Bhd may face near-term headwinds, as operators defer non-essential maintenance scopes to sustain production levels.”
Overall, BIMB Securities Research maintained its “overweight” stance on the O&G sector, pointing out that valuations continue to appear undemanding despite the ongoing conflict, as the sector provides a natural hedge against elevated oil prices and geopolitical risk.
At this juncture, it favours companies with long-term earnings visibility, solid growth potential, and decent dividend yields. Its top picks are MISC Bhd and Hibiscus Petroleum Bhd.
BIMB Securities Research continues to favour MISC for its strong earnings visibility, underpinned by long-term charter contracts that provide stable and recurring cash flows. This supports a sustainable 4%-5% dividend yield, making it a defensive play within the sector.
For upstream exposure, the research house maintains a positive view on Hibiscus, driven by its production growth trajectory and potential entry of strategic investors, which could inject additional assets and materially enhance its scale.
“We understand that this exercise could be announced by the end of financial year 2026, representing a key re-rating catalyst.”
