KUALA LUMPUR (July 14): Oil prices could potentially revisit recent highs in the near term amid reignited geopolitical tensions in the Middle East, according to Sumitomo Mitsui Banking Corp.

Prices could hit US$90-US$100 in the near term before easing towards around US$70-US$85 by the end of the year, according to Jeff Ng, head of its Asia macro strategy for the global markets and treasury departments.

“We continue to expect that the stalemate [in the Middle East] may persist,” he told The Edge on the sidelines after the economic seminar hosted by Sumitomo Mitsui. “This stalemate may still happen at a low intensity until the end of the year.”

Brent, the global benchmark for crude oil, rose to US$84 per barrel on Tuesday, after US President Donald Trump announced a blockade on Iranian vessels in the Strait of Hormuz while offering US protection for other ships passing through the critical waterway for a 20% fee.

The fragile truce has unravelled with the exchange of attacks and Iran has also struck vessels, as well as production facilities and pipelines of American allies in the Middle East.

Malaysia’s economy will likely weather geopolitical uncertainties, Ng said. However, supply chain shortages could disrupt products used for re-exports, he flagged.

Excessive competition from China is also a downside risk, he cautioned. “If there's a lot of competition, then there may be some crowding out of Malaysia's exports.”