O&G Sector Remains Resilient Although IEA Slashes 2026 Oil Demand Outlook - MBSB IB
KUALA LUMPUR, April 17 (Bernama) -- The oil and gas sector remained positive, although the International Energy Agency (IEA) has sharply revised its 2026 oil demand outlook from growth of 730,000 barrels per day (bpd) to a contraction of 80,000 bpd, reflecting what it described as the largest supply disruption in history.
MBSB Investment Bank Bhd (MBSB IB) said elevated oil prices and persistent supply constraints are increasingly weighing on downstream demand, with the petrochemical sector experiencing a material slowdown driven by affordability pressures and limited feedstock availability.
“Asian petrochemical producers have reduced operating rates due to restricted access to naphtha and liquefied petroleum gas (LPG), resulting in a structural shift from oversupply to a tight, risk-priced market characterised by physical scarcity,” it said in a note.
The bank said several major petrochemical companies have declared force majeure, underscoring a breakdown in the traditional “just-in-time” supply model.
Producers in South Korea, Singapore and Indonesia remain particularly vulnerable, as they lack sufficient domestic crude oil to meet industrial demand and rely heavily on imported feedstock.
MBSB IB said, in contrast to many of its Asian peers, Petronas Chemicals Group Bhd is relatively insulated due to Malaysia’s domestic natural resource base.
Its primary competitive advantage lies in its heavy reliance on natural gas, which forms the backbone of its operations. As a result, Petronas Chemicals' share price has demonstrated notable resilience during the crisis, supported by its relatively secure access to domestic feedstock.
“We maintain our ‘buy’ call on Petronas Chemicals with a target price of RM6.60,” it added.
-- BERNAMA