Oil prices to stay elevated even if geopolitical tensions ease – RHB Research
KUALA LUMPUR: Oil prices are unlikely to immediately return to pre-war levels even if geopolitical tensions ease as physical capacity constraints continue to limit the recovery of regional energy supplies, said RHB Research.
KUALA LUMPUR: Oil prices are expected to remain elevated even without a resolution to geopolitical tensions, according to RHB Research. The research firm attributes the continued high prices to physical constraints in energy supply, rather than solely geopolitical factors. With Middle East refinery runs at 7.3 million barrels per day, compared to 9.9 mbpd prior to the war, the recovery is expected to be gradual, with a return to pre-war levels only from the second quarter of 2027, as damaged facilities require extensive repairs and replacements.
Qatar's LNG capacity remains offline, with repairs to two damaged LNG trains potentially taking up to three years. This slow recovery in physical supply is projected to maintain support for oil, refined product, and freight markets, even if geopolitical risk premiums diminish. Among the companies RHB Research covers, five out of nine reported Q2 2026 results that surpassed expectations, while the remaining four fell short.
Despite this mixed performance, Petronas' continued growth in upstream investments bolsters RHB Research's positive outlook for Malaysia's oil and gas sector. The firm retains its forecasts for Brent crude oil prices at $89 and $72 per barrel for 2026 and 2027, respectively. Geopolitical tensions are anticipated to provide near-term support to oil prices, petrochemical prices, and freight rates.
RHB Research maintains an overweight rating on the oil and gas sector, with MISC Bhd and Dialog Group Bhd as its top recommendations.
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