A potential curveball has appeared in the form of an announcement from Opec+ declaring an unanticipated voluntary supply cut beginning next month.
The organisation, made up of 13 Opec members plus an additional 11 countries including Malaysia, will cut oil supply by up to 1.16 million barrels per day , taking the total of supply cuts by the group to 3.66 million bpd for 2023.
Therefore, they believe that even if higher oil prices arising from the Opec+ supply cut are sustained, it could have a slight negative impact on Malaysia’s public finances and could put the idea of targeted fuel subsidies on the table again. “Bank Negara’s policies have always been traditionally more moderate, which is good in that they do not blindly follow the Fed. Bank Negara has also always mentioned that it will decide according to the evolution of the situation,” he noted.
Williams perceives the real risk would be in whether this supply cut will lead to an escalation in geopolitical issues because it looks coordinated among a number of countries keen on changing the global balance of power.From a bigger-picture standpoint, Coface’s Aw and Barre said the current knee-jerk price reaction to the supply cut will likely be limited, as the global oil market has been in surplus for three straight quarters.
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