PETALING JAYA: Malaysia anticipates short-term gains in trade revenue as a net oil exporter, potentially offsetting current export challenges exacerbated by the weak standing of the ringgit amid escalating conflict in the Middle East, according to experts.
Centre for Market education researcher Alfi Syahrin Ario Waskito noted that rising oil and gas prices will affect Malaysia’s financial situation, which potentially may lead to short-term increases in trade revenue within the oil and gas sector.
“It definitely offset the weak export that Malaysia faces right now with the weak standing of the MYR,” he told SunBiz.
He added, “But we also must be careful that raising prices in the long term can drive down consumer consumption because the hike will drive inflation.”
Alfi Syahrin said geopolitical factors are major drivers of oil and gas prices, compounded by rising demand in China.
Additionally, he said production cuts by Organisation of the Petroleum Exporting Countries (Opec) members, notably Saudi Arabia, and Russia have significantly contributed to global price increases.
“And with the escalation of conflict in the Middle East (between Israel and Iran) the oil price will experience a massive hike, since Iran is one of the major players in Opec,” he said.
Economic Club Of Kuala Lumpur chairman and KSI Strategic Institute for Asia Pacific deputy chairman Datuk Seri Mohamed Iqbal Rawther also noted that oil prices have risen.
He said Malaysia as an oil-exporting nation and its role in state-owned entities such as Petroliam Nasional Bhd (Petronas) may stimulate the country’s financial position.
“Those who export oil are Petronas and government-owned companies. So, this is a good thing. This means that our returns from those sales will increase, and this may stimulate Malaysia’s financial position,” he told SunBiz.
However, he said higher oil prices may also lead to increased inflation, which could impact consumer spending. “There are also concerns about the depreciation of the ringgit.”
In terms of consumers, he said the Malaysian government provides subsidies. “Therefore, market prices will not rise significantly,” he added.
