May 14, 2018 (BE2C2) — Malaysia’s new government will need to act quickly to capitalize on any economic momentum from higher crude oil prices, an analyst said.
The opposition Pakatan Harapan coalition emerged as the victor in May 9 general elections in Malaysia, grabbing a majority in parliament with the 92-year-old Mahathir Mohamad, who left office 15 years ago, becoming the country’s new prime minister.
Mahathir was until two years ago an advisor to Malaysia oil and gas company Petroliam Nasional Berhad, better known as PETRONAS.
Steve Jenkins, a vice president for chemicals at consultant group Wood Mackenzie, said in remarks emailed to UPI that the impact of change in government in Malaysia on its oil, gas and chemicals sector is likely to be tied in to changes in the country’s wider economic policy, “but could be dramatic in their own right.”
For the oil and gas sector, Mahathir’s government could do away with tax legislation meant to reduce dependency on oil and gas revenue. That legislation was enacted three years ago, just as crude oil prices started to tumble toward $30 per barrel.
Brent crude oil, the global benchmark for the price of oil, was trading near $77 per barrel early Friday amid reports that a forecast for a $7 per barrel increase in the average price for oil this year was made before the U.S. left the Iranian nuclear deal.
For Malaysia being one of the top natural gas exporters in the world, behind Qatar, the oil price spike bodes well for its economy, as many of the regional island nations depend on the super-cooled liquefied natural gas to keep their momentum going.
In March, PETRONAS formed a strategic alliance with the Saudi Arabian Oil Co., commonly known as Saudi Aramco, to get refinery feedstock from its Saudi partners. Two weeks ago, PETRONAS marked the start of a 15-year sales agreement with South Korean Oil Refining Co. with its first Korean delivery of LNG.