KUALA LUMPUR, Feb 14 — RHB Research has maintained its “overweight” call on the regional oil and gas sector and raised its crude oil price forecast to between US$75 and US$90 per barrel for 2022-2023 from US$70 to US$83 earlier.

The research house said the higher estimate for crude oil prices for the year was to reflect heightened geopolitical tensions between Russia and Ukraine and the continuous shortfall in meeting Organisation of the Petroleum Exporting Countries (OPEC) production quota. 

“We still keep a relatively lower price forecast at US$80-US$88 per barrel in the second half of 2022 on the back of higher supply pressure from OPEC+, in accordance with its production schedule and a potentially stronger rebound in US production levels, as the country’s rig count is still on the rise,” it said in a research note today.

In its latest monthly report,  the US Energy Information Administration’s forecasts on US oil production in 2022 and 2023 were revised upwards to 12 million barrels per day (mbpd) and a record 12.6 mbpd from 11.8 mbpd and 12.4 mbpd.  

RHB Research said demand destruction was inevitable for both Russia and Ukraine if there is a war.

“On a global scale, the expectation of oil prices to go higher and stay at such levels could dent consumer spending patterns, and the impact appears to be more evident for the high income Organisation for Economic Cooperation and Development (OECD) countries,” it added. 

RHB Research expects oil prices to trend higher to an average of US$100 per barrel in the second quarter of 2022 but still assumes there would be no massive supply damage in the longer term.

“Oil prices could potentially hit US$110-US$120 per barrel if the war materialises, and will stay higher for longer - depending on the magnitude of the event,” it added.

RHB Research is “overweight” on both Malaysia and Thailand’s oil and gas sectors.

It noted that exploration and production, as well as petrochemical companies, should continue to enjoy strong earnings while riding on stronger commodity prices while service providers should gradually benefit from a pick-up in activities and increased domestic capital expenditure allocations. — Bernama