KUALA LUMPUR (March 2): Bursa Malaysia energy stocks rallied on Monday amid broad market selldown as escalating US-Israel military strikes on Iran sent oil and gas (O&G) prices sharply higher.
Bursa Malaysia Energy Index, which tracks 32 stocks in the sector, climbed over 3% with more than a dozen stocks posting strong gains.
Dialog Group Bhd (KL:DIALOG), the sector’s largest company in terms of market capitalisation, climbed as much as 11 sen or 6.25% in the morning to RM1.87, before easing to RM1.81 at market close. Hibiscus Petroleum Bhd (KL:HIBISCS) surged 18.13% to RM1.89.
“Direct beneficiaries of higher oil prices include Hibiscus and Dialog,” said CGS International, noting that Hibiscus is a pure exploration-and-production company and about 35% of Dialog’s profits come from upstream.
MISC Bhd (KL:MISC), up 1.2% to RM8.17, could also gain from elevated tanker freight rates as importers scramble for alternative crude supplies, particularly from North and South America, lengthening shipping distances, the research house said.
Oil prices have spiked following reports of attacks on ships near the Strait of Hormuz. About 20% of the global oil supply moves each day through the critical chokepoint controlled by Iran. Brent, the global benchmark for crude oil, surged over 5% to US$76.61 (RM297.76).
As the Iran conflicts evolves, a 10-25% surge in oil prices could send Brent to US$80-95 “in coming weeks, at least momentarily,” said Vishnu Varathan, head of Asia ex-Japan macro research at Mizuho Bank.
A crisis triggered by a blockade of the Straits of Hormuz could easily send oil to as high as US$135 per barrel though efforts to clear the waterways in subsequent weeks could bring down prices back to about US$80-85 per barrel, he added.
The surge comes as a relief to investors digesting news of 18% earnings decline at Malaysia’s national O&G company PETRONAS. Capital expenditure at the company, officially known as Petroliam Nasional Bhd, was also less in 2025 compared to 2024.
Still, the plan is to spend up to RM50 billion annually as capital expenditure, a major source of revenue for firms serving PETRONAS, its president and group chief executive officer Tan Sri Tengku Muhammad Taufik said at the news conference on Friday.
For Kenanga Investment Bank, there are “promising signs” that 2025 could be the bottom for the current industry cycle. Further, PETRONAS has started working on multiple upstream projects domestically, paving the way for more development spending in the years ahead, the house noted.
An increase in crude oil price could also lead to rising petrochemical prices, though the effect will likely take two-to-three months for Petronas Chemicals Group Bhd (KL:PCHEM) given its existing contracts that have pre-committed prices and volumes, said Hong Leong Investment Bank.
AirAsia X Bhd (KL:AAX), meanwhile, will see incrementally negative effect, the research house said, noting the strong correlation between prices of Brent and jet fuel prices. Every US$1 change in jet fuel price would cut into the airline’s bottomline by RM80 million or 5.3%, its analysis showed.