Kuala lumpur: MBSB Investment Bank Bhd anticipates crude oil prices will remain low due to a substantial and growing supply surplus that demand will struggle to absorb fully.
According to BERNAMA News Agency, the investment bank forecast Brent crude oil prices to fluctuate between US$55 and US$60 per barrel in 2026. If the United States successfully markets 50 million barrels of Venezuelan oil in the near term, it could exert significant downward pressure on crude oil prices, pushing them toward the lower end of the forecast. However, the forecast remains unchanged, as it will take at least two years for Venezuela to increase its production capacity from the current 0.8 million barrels per day (mbpd) to 1.5 mbpd.
Excluding the potential impact of Venezuela's additional oil supply, MBSB noted that the global oil supply is expected to increase by 1.2 to 2.4 mbpd in 2026. This increase is driven mainly by non-OPEC+ producers such as the US, Brazil, Canada, and Guyana, which are projected to collectively add more than 1.2 mbpd to global supply. Meanwhile, the OPEC+ coalition, led by Saudi Arabia and Russia, has decided to maintain output levels unchanged for the first quarter of 2026 amid a looming crisis in Venezuela and tensions between the United Arab Emirates and Saudi Arabia.
The group also reaffirmed its commitment made in late November to pause production increases in January, February, and March 2026 due to seasonal factors. However, the possibility that OPEC+ could raise production by up to 1.2 mbpd in 2026 to defend its market share should not be ruled out, MBSB Investment Bank stated.
In contrast, global oil demand is expected to grow by only 0.7 mbpd this year due to a weakening global economy, particularly in major oil-consuming countries like China and India. On the domestic front, MBSB Investment Bank maintained a 'neutral' stance on the sector, with its top pick being Dialog Group Bhd with a target price of RM2.17 per share.
Given the expectation of weakening crude oil prices in 2026, the investment bank is retaining a 'neutral' position on the sector. It anticipates limited upside potential due to a forecast surplus in crude oil, which will likely lead to lower trading prices affecting both upstream and downstream operations. While share prices of upstream players have significantly declined amid uncertainties and structural changes, such as the clean energy transition, crude oil surplus, and the Petronas-Petros overhang, MBSB recommends adopting a wait-and-see approach before considering any purchases on dips.