Malaysia’s LNG Edge To Lift Economy On Gas Surge -- CIMB

KUALA LUMPUR, March 3 (Bernama) -- Malaysia’s substantial Liquefied Natural Gas (LNG) exports uniquely position the country to benefit from rising gas prices, with a US$5 per million British thermal units (MMBtu) increase estimated to add 1.23 per cent of gross domestic product to the current account.

CIMB Treasury and Markets Research noted that Malaysia posts a net oil and gas trade surplus despite being a net crude oil importer, thanks to its significant LNG export capacity.

“On a combined basis, Malaysia would be the only major global LNG exporter (including Indonesia, other LNG exporters, and Trinidad and Tobago) to record a net improvement in its current account.

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“In such a scenario, Malaysia’s external position and currency would likely diverge markedly from regional peers, which could face further deterioration in their current account balances,” CIMB said in a research note.

On inflation, CIMB said that assuming the US dollar and ringgit remain stable at around RM3.85, and the BUDI95 fuel price is unchanged, a US$10 per barrel increase in Brent crude would raise headline inflation by 0.1 per cent in 2026, factoring in increases in unsubsidised RON95 and diesel prices.

“At an unconstrained level, every US$10 per barrel increase in Brent crude is estimated to raise the economic price of RON95 by around 10 per cent, which would have added roughly 55 basis points to headline inflation if not for the BUDI95 subsidy, at an additional fiscal cost of RM3.8 billion per year.

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“Should Brent crude reach US$100 per barrel, the government could raise the BUDI95 price back to RM2.05 per litre, adding another 10 basis points to headline inflation while reducing the annual subsidy bill by about RM1 billion.”

CIMB said the impact on inflation would remain manageable at this level, making a hike to the OPR unlikely even under this scenario.

Fiscally, every US$10 per barrel increase in Brent crude is expected to boost petroleum-related revenue by roughly RM3.5 billion.

At the same time, annual RON95 and diesel subsidies after subsidy rationalisation are projected to rise by RM3.8 billion and RM1.3 billion, respectively, resulting in a net fiscal effect of RM1.6 billion.

Separately, a US$5/MMBtu increase in natural gas prices is expected to raise the LNG subsidy by around RM500 million.

However, CIMB noted that with the ringgit having appreciated nearly seven per cent since Budget 2026 was tabled, the net fiscal impact of an oil price increase from the initial US$10 per barrel assumption is likely to be minimal compared with the original figures in Budget 2026.

-- BERNAMA