Malaysia Still Exposed To Oil Price Swings Despite LNG Strength - Kenanga IB
KUALA LUMPUR, Aug 19 (Bernama) -- The recent oil shock has exposed a less visible vulnerability in Malaysia's energy balance, even as the country remains a net energy exporter, said Kenanga Investment Bank Bhd (Kenanga IB).
However, Malaysia's fiscal position remains exposed to refined product prices through subsidies, while its trade position shows a crude oil deficit but a liquefied natural gas (LNG) surplus.
"Malaysia is a net oil importer, but LNG is what makes Malaysia's energy balance positive. In 2025, Malaysia ran a RM30.4 billion deficit in crude and condensate and only a RM3.2 billion surplus in refined products, resulting in a combined petroleum deficit of RM27.2 billion.
"The overall oil and gas surplus of RM18.2 billion exists because of a RM45.4 billion LNG surplus," the bank said in a research note today.
Kenanga IB said fuel subsidies are linked to refined product prices, while LNG receipts accrue to a different fiscal line and arrive with a lag.
"Higher oil prices therefore protect the budget far less than the overall energy export position implies," it said.
According to estimates by the Ministry of Finance (MoF), every US$1 per barrel (bbl) increase in oil prices raises federal petroleum revenue by RM300 million annually, excluding dividends from Petronas.
However, the bank estimates an annual increase of around RM1.05 billion for each US$1/bbl move.
Kenanga IB noted that the fiscal exposure is further compounded by relatively low subsidy "strike" levels.
"The fiscal exposure has a relatively low strike. We put the RON95 subsidy strike at around US$44/bbl Brent and the diesel strike at around US$48/bbl following the RM2.10 BUDI Diesel price, both on a futures basis.
"Neither strike is close to our US$80/bbl average house-view for 2026, so the exposure persists even without another major oil shock," it explained.
The bank pointed out that the targeted subsidy measures have helped to reduce the fiscal burden.
BUDI95 is delivering estimated annual savings of RM2.5 billion to RM4.0 billion, and BUDI Diesel a further RM2.0 billion from July.
Combined, these targeted subsidy initiatives could save RM4.5 billion to RM6.0 billion annually.
It added that MoF has consistently framed the savings as fiscal space for education, healthcare and public transport infrastructure.
-- BERNAMA