OSK: Malaysia to benefit from Iran oil ban move

KUALA LUMPUR: The price of crude oil will surge if Iran retaliates on the latest move by the European Union (EU) to halt import of oil from the Gulf country, but Malaysia will benefit from this development as it is still a net exporter of oil, a senior analyst said.


"High oil price is always positive for Malaysia as we are a net oil exporter. The increase in oil price will also boost the Malaysian oil and gas sector," said OSK Research director Chris Eng Poh Yoon.

He was asked to comment on the extent of the impact of high oil price on Malaysia's economy following EU's move to stop importing oil from Iran from July 1 and Iran's impending decision to bar exports of its oil to EU within this week.

A news report yesterday said that Iran is considering banning oil export to the EU for five to 15 years, while indicating that prices would surge if the EU stopped importing Iranian crude.

According to the report, Iranian lawmakers were expected to debate a bill last Sunday to ban exports of crude to Europe in a move calculated to hit ailing European economies before an EU-wide ban on any Iranian oil comes into effect in July.

Escalating tensions between Iran and Western allies over Tehran's nuclear programme, particularly Iran threats to close the vital Straits of Hormuz Gulf oil export route, have helped push up Brent crude prices by about US$8 per barrel (RM24.32) since mid-December.

Benchmark Brent crude prices rose to around US$111.50 a barrel (RM339) on Friday on expectations Iran's parliament vote to halt exports to the EU this week and Iran had said that the oil price could hit US$150 a barrel (RM456) because of the EU ban.

"Brent is now trading at US$111 a barrel and WTI (West Texas Intermediate) at US$98 a barrel. I believe that Saudi Arabia and Kuwait have committed to making up the shortfall of any Iranian oil exports.

"So, while there may be some upward knee-jerk reaction pushing Brent closer to the US$120 a barrel level, the US$150 price level may still be rather far-fetched unless Iran bars the Straits of Hormuz and war is declared.

"I think China and Europe have probably secured enough commitments from other oil producers that war can be averted," Eng said.

Meanwhile, KFH Research maintains its average crude oil price forecast of US$100 per barrel (RM304) for 2012.

"Crude oil price has averaged at US$100.67 per barrel until January 24 2012 as speculation that supplies from Iran will be disrupted countered concerns that economic growth will slow.

"Besides concerns on the health of the global economy and the string of sovereign rating downgrades in Europe, the other worry on the energy market comes mainly from Iran's threat to close an important transportation channel," KFH Research said.

It is learnt that about 20 per cent of the world's oil flows through the Straits of Hormuz.