KUALA LUMPUR (Sept 10): Malaysia's 'sell high, buy low' strategy for oil cushions it against volatile global prices, with every US$10 (RM40.70) per barrel rise potentially raising RM6.5 billion for the government, a research report said.
RHB Research said in its report that petroleum-related receipts, such as royalties, petroleum income tax (PITA) and export duties, would make up the bulk of this at about RM3.7 billion.
It estimated that PETRONAS dividends would make up RM2.8 billion, but admitted that "actual payouts will depend on operational performance and market conditions".
“Overall, higher oil prices tend to modestly dampen economic growth by increasing production costs and weighing on domestic activity. However, the negative effect is partly offset by stronger oil and gas export earnings and related economic spillovers,” it said.
However, RHB Research also projected that the fuel subsidy bill would go up RM5.6 billion for every US$10 per barrel increase.
"Our key conviction is that oil price increases have a limited adverse impact on Malaysia’s growth outlook and only a modest effect on consumer inflation, while providing some offsetting support through stronger energy-sector export
performance."
Malaysian crude grades continued to command significantly higher premiums over Dated Brent, cushioning revenue losses despite the decline in outright oil prices.
The country’s advantage lies in its production of high‑value light sweet crude such as Tapis, Kikeh, Kimanis and Dulang, which fetch premiums due to low sulphur content, high API gravity (meaning the oil is light or less dense), strong yields of gasoline, diesel and jet fuel, and lower refining costs.
It said Malaysia remains a net exporter of crude oil and petroleum products, and it anchors its petroleum trade by a "quality arbitrage" strategy. This entails selling pricier premium crude while lower‑cost feedstock is bought, allowing Malaysia to capture strong export premiums while containing domestic refining costs.
“Essentially, this has created a long‑standing ‘sell high, buy low’ strategy within Malaysia’s petroleum trade structure,” the research house noted.
It said this strategy has historically supported export earnings, trade balances and oil‑related profitability even when production volumes were trending lower.
Looking ahead, the research house forecasts Brent crude prices to ease to US$85 per barrel by end‑2026 and further to US$75 per barrel by end‑2027, premised on expectations of a renewed de‑escalation in geopolitical tensions.
At the time of writing, Brent crude futures edged up to US$101.40 per barrel, breaking through the psychologically crucial US$100 mark for the first time since July, with traders bracing for deeper supply disruption as Iran and the United States launched their largest attacks on shipping since the six-month-old conflict began.