• Office of YB Wong Chen

Good news as oil prices boost significantly

Oil prices had a big boost yesterday, up by 25%. Unconfirmed reports that Saudi and Russia will half their production and negotiate an end of the price war, pushed up prices. We shall see if these reports prove to be true.

Whether it proves to be true or not, this is still a bit of good news for Malaysia, an oil and gas exporter. However we must be cautious with this news. While prices may have rallied yesterday, global consumption volume is smaller as most cars and manufacturing activities are affected by global lockdowns.

Malaysia’s dependence on oil and gas is a well documented fact. For at least a decade, we have been talking about moving away from this dependency. Now, in the time of Covid-19, even that reliable dependency has evaporated with the overall price fall since January 2020. Note that for budget 2020, we used USD62 per barrel as a base number. Oil prices ended USD29 per barrel yesterday.