2027 Budget will have to impute higher crude oil price assumptions
KUALA LUMPUR: The Malaysian government will have to chalk in a higher crude oil price assumption of around US$90 per barrel for the 2027 Budget, given the latest development in the Middle East, with Iran and its proxy the Houthis are involved in a tit-for-tat attacks against the United States’ assets and Saudi Arabia, putting the already precarious situation even dire.
The Malaysian government will have to assume a higher crude oil price of around US$90 per barrel for the 2027 Budget, according to Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid. This forecast is due to ongoing geopolitical tensions in the Middle East, particularly the attacks by Iran and its proxy the Houthis against U.S. and Saudi Arabian assets, which have caused supply disruption fears.
The Brent crude price has surged beyond the US$100 mark, marking its highest level in over six weeks. Afzanizam argued that maintaining the existing fuel subsidy structure if oil prices remain around US$100 a barrel would require a policy trade-off, as greater resources allocated to subsidies could necessitate cuts in other areas.
The fiscal deficit stood at 4.2% of GDP in the first half of 2026, above the full-year target of 3.5%, while government debt was around 65% of GDP.
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