KUALA LUMPUR (Aug 24): Oil prices could retest US$100 a barrel if fighting between the US and Iran intensifies following the arrival of a fresh US aircraft carrier in the Middle East, according to BIMB Securities.

“We anticipate that the arrival of the USS George Washington in the Middle East theatre to relieve the USS Abraham Lincoln, [and] will elevate [the] risk of a step up in kinetic tempo against Iranian assets,” the research house said in a note on Monday.

“And retaliatory strikes will follow,” it added.

With the Islamabad memorandum — an interim US-Iran agreement signed in June aimed at ending hostilities and reaching a broader settlement — now expired, BIMB anticipates the balance of risk now leans towards “kinetic escalation”.

“We anticipate the risk of escalation in aggression in the ST (short-term) is now elevated, especially with the MOU lapsed. 

“Strait transits are still the primary transmission mechanism to oil prices, but the escalation will ensure its closure — even for dark crossings,” the research house said. 

BIMB said there is a 55% chance of an incremental normalisation scenario, where negotiations continue with occasional incidents persisting and gradual traffic recovery, underpinning a base case outlook for Brent crude at US$85-US$100 per barrel and the FBM KLCI at 1,730-1,760. 

The research house assigns a 25% probability to a best-case comprehensive settlement scenario that could see meaningful progress on governance and sanctions relief, driving Brent to US$75-US$85 per barrel and the index to 1,780-1,820. 

Meanwhile, BIMB sees a 20% chance of a worst-case negotiation breakdown, which would push Brent above US$100 per barrel and the FBM KLCI down to 1,650-1,700 amid prolonged aggression and an inability to engage in discussions.

BIMB expects any renewed closure of the Strait to lift oil prices and benefit stocks tied to the disruption.

Against that backdrop, BIMB’s preferred trading ideas are PETRONAS Chemicals Group Bhd (KL:PCHEM) and Hibiscus Petroleum Bhd (KL:HIBISCS), while non-rated Hengyuan Refining Company Bhd (KL:HENGYUAN) has the highest correlation to Brent among stocks on its broader watchlist.

PETRONAS Chemicals is expected to benefit from higher utilisation, stronger olefins and derivatives spreads and lower turnaround costs, offsetting softer product prices. Group utilisation is guided at 80%-85% in the third-quarter ending September (3QFY2026) and around 93% in 4QFY2026.

For Hibiscus Petroleum, every US$5 per barrel increase in BIMB’s oil-price assumption would lift forecast FY2027 earnings by about RM52 million. 

The research house’s target price on Hibiscus Petroleum is currently at RM2.90, 36.2% higher than its price of RM2.13 on Aug 21, 2026.

Hengyuan Refining meanwhile is expected to benefit from wider crack spreads, which are the price difference between raw crude oil and the petroleum products refined from it.

On the other side of the trade, BIMB flagged AirAsia Group Bhd (KL:AAGB) as a stock to track on a de-escalation view, arguing that sustained US aggression is difficult to maintain. 

The airline remains loss-making, though the research house expects losses to narrow through the year from a RM527 million net loss in 2QFY2026, when the peak of jet fuel panic-buying did the most damage.

The USS Abraham Lincoln’s record deployment of more than 260 days has resulted in operational fatigue that has been compounded by logistics strain following severe damage to a key US supply hub in Bahrain earlier in the war.

While the USS George Washington brings with it a fresh air wing, restocked ammunition and a rested crew, the carrier will inherit the same logistics constraints the USS Abraham Lincoln was facing.

BIMB nevertheless expects the escalation window to be brief, citing both the US military's persistent logistics constraints and Washington's incentive to cool tensions ahead of the Nov 3 mid-term elections.