APAC Offshore Spending Remains Stable Post-West Asia Conflict
By Siti Radziah Hamzah
KUALA LUMPUR, July 7 (Bernama) -- Asia Pacific (APAC) offshore spending remains broadly stable post-West Asia conflict, with Southeast Asia (SEA) estimated to see a 12 per cent increase in greenfield capital expenditure (capex) to more than US$100 billion (US$1 = RM4.08), reflecting stronger prioritisation of new offshore developments, said Hong Leong Investment Bank Bhd (HLIB) today.
The investment bank said brownfield capex is expected to be driven by South Asia (+23.0 per cent) and SEA (+3.0 per cent), highlighting continued investment in existing assets to support near-term supply resilience.
While the United States-Iran ceasefire agreement remained fragile, HLIB believed developments were headed towards de-escalation, and the signing of the US-Iran 14-point memorandum of understanding (MOU) could mark a potential turning point in West Asian geopolitical tensions.
Traffic along the Strait of Hormuz also appeared to be recovering following the signing of the MOU, although actual flows may be understated as satellite imagery suggests more vessels are transiting with AIS transponders switched off.
HLIB said its view on the oil and gas sector is anchored on two key investment themes: firstly, whether a resolution is ultimately reached on energy security and higher inventory reserves, benefitting pipeline players and tank terminals.
“Secondly, a potential Petroliam Nasional Bhd (Petronas) capex upcycle by 2027, which should support domestic oil and gas services and equipment (OGSE) players, particularly those exposed to upstream development, hook-up and commissioning, maintenance, marine support, fabrication and pipeline-related works,” it said.
Oil price outlook
HLIB revised its 2026 Brent forecast downward to US$80 per barrel from US$90, while maintaining US$75 per barrel for next year.
It noted that the US Energy Information Administration’s June Short-Term Energy Outlook points to a sharp drawdown in OECD commercial inventories, with days of supply projected to fall to 50 days by late 2026, well below the pre-war level, which was above 60 days.
“Given the drawdown in global inventories, we expect oil prices to remain elevated at the US$80 per barrel level until global oil flows normalise and inventories are replenished. Brent could remain supported at more than US$75 per barrel into early 2027 in our view, should inventory rebuilding extend beyond 60 days of supply, reflecting stronger energy security considerations,” it said.
The investment bank said oil prices could be further supported by a longer production recovery timeline, given total shut-in volumes in the Strait of Hormuz region rose to 45 per cent in May 2026 from 35 per cent in March 2026.
Meanwhile, IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said Brent and West Texas Intermediate (WTI) crude have retreated substantially from their recent peaks, with prices now stabilising around the US$70-75 per barrel range.
He added that if this level is sustained over the coming months, it would provide a more favourable operating environment for businesses by lowering energy-related input costs and improving cost certainty.
“More broadly, sustained oil prices within the US$70-75 per barrel range would help ease global inflationary pressures by reducing cost-push inflation. This would support business investment, strengthen consumer purchasing power, and provide central banks with greater flexibility to maintain supportive monetary policies, thereby reinforcing the global economic recovery,” he told Bernama.
At the time of writing, Brent was up by 0.90 per cent to US$69.17 per barrel, while WTI rose 0.94 per cent to US$72.67 per barrel.
-- BERNAMA