OIL PRICES STABILISE, MALAYSIA INFLATION REMAINS MODEST-- APEX

KUALA LUMPUR, March 5 (Bernama) -- Brent crude prices are expected to stabilise after an initial geopolitical-driven spike, keeping Malaysia’s inflation modest at 1.6–1.9 per cent and the 2026 fiscal deficit on track at 3.5 per cent of gross domestic product (GDP), Apex Securities Bhd said.

In a research note, the firm said the inflationary impact should remain limited, with every US$10 per barrel (bbl) increase in Brent estimated to raise headline inflation by only 0.1 percentage points, keeping 2026 inflation within the 1.6–1.9 per cent range.

The oil market has calmed following US President Donald Trump’s announcement on Tuesday that his administration intends to provide insurance guarantees and naval escorts to secure the passage of oil tankers and other vessels through the Straits of Hormuz.

At the time of writing, Brent crude was up 2.15 per cent at US$83.24 per barrel.

Apex noted that the RON95 fuel price cap of RM1.99 per litre for eligible Malaysians should further limit pass-through to domestic prices.

From a fiscal perspective, the firm said higher oil prices would boost petroleum-related revenue but also raise subsidy costs.

“Our estimates suggest that every US$10/bbl increase in Brent lifts government revenue by around RM3 billion, while increasing fuel subsidy spending by about RM3.5 billion, resulting in only a modest net fiscal impact. Overall, we expect the government to remain on track to achieve its 2026 fiscal deficit target of 3.5 per cent of GDP,” it said.

Apex added that while geopolitical tensions persist, sustained demand for electronics and electrical (E&E) products amid the artificial intelligence-led technology upcycle should continue to support external growth.

On the domestic front, Apex maintained its 2026 GDP forecast at 4.7 per cent, down from 5.3 per cent in 2025, supported by stronger tourist arrivals under Visit Malaysia 2026, continued policy support for lower-income households, and robust investment driven by ongoing data centre expansion.

-- BERNAMA