KUALA LUMPUR, Dec. 15 (Xinhua) -- Analysts have foreseen a challenging outlook for Malaysia's oil and gas sector amid reducing oil prices and lower domestic capital expenditure (capex).
MBSB Research said in a recent report that the outlook for crude oil prices in 2026 is anticipated to remain low due to a significant and growing supply surplus that demand will not be able to absorb fully.
The MBSB also anticipated that the near-term slowdown in upstream activity would persist into 2026.
It highlighted two significant challenges affecting the subsectors: the ongoing gridlock between Petroliam Nasional Berhad (Petronas) and Petroleum Sarawak Berhad (Petros), and the expectations of lower crude oil prices in 2026.
"The profitability of companies involved in exploration and production (E&P) is closely tied to oil and gas prices, making them more susceptible to price pressures, even if production and sales volumes increase in 2026," it noted.
CGS International also said in its recent report that Malaysia's oil and gas sector's business outlook generally appears bearish, given reduced volumes of Petronas work in Malaysia since 2024, lower daily charter rates for drilling jobs globally and in the Southeast Asian region, and lower oil prices that affect upstream players.
Maybank Investment Bank said that due to a double whammy of lower oil price expectations and ongoing issues between the two local oil majors, it foresees yet another year of low Petronas domestic capex spending in 2026.
"This could lead to continued slow offshore activities and jobs for the respective segmental service providers in 2026, resulting in minimal earnings growth, as the revenue and profitability of companies in the oil and gas services and equipment (OGSE) space typically mirror the Petronas capex spending cycle," said the research house. ■
