KUALA LUMPUR, March 22 – The slump in global fuel prices will spell a challenging year ahead for Malaysia, especially its oil and gas exploration and production sector, says US firm Murphy Oil. In an interview with online magazine The Oil & Gas Year, Murphy Oil vice-president for Malaysia John James said: “We’ve been through this before and prices have historically rebounded. In 2009, we saw a similar drop from US$150 (RM556) to US$40 per barrel, but it quickly improved. This time it probably won’t recover quite as quickly.” He added that new deep-water developments and enhanced oil recovery projects would be scaled down or deferred given the current market sentiment.
But he was positive that things would get better. “In general, 2015 will be a challenging year, but at the end of the day this will make companies evaluate everything they do in terms of cost and priority, making them more efficient and selective,” he said. Reuters reported today that oil prices jumped yesterday with US crude up 4% after the dollar fell on interest-rate uncertainty, lifting demand for dollar-denominated commodities from holders of other currencies. Tim Evans, energy futures specialist in New York for Citi Futures, said the rise was paper market tightness and unrelated to the physical market.
He was referring to the general view that there was too much oil in the world. Reuters said oversupply is likely to keep a lid on oil over the next few months, and prices could retreat a little in the short term, based on its own poll. Putrajaya ended the subsidies system last December after global oil prices slid to below US$60 a barrel as oil-producing countries kept production up despite a souring world economy that slowed consumption. Global oil prices had been on a downward slide since June due to excess production and showed no signs of recovery, which prompted Malaysians to believe that they were looking at cheaper oil prices in 2015. But retail prices of fuel went up from March 1, with RON95 at RM1.95 a litre and RON97 at RM2.25 a litre.