Kuala lumpur: While the Brent crude oil price hike is impacting the global market, certain heavy indexes related to artificial intelligence (AI) and semiconductors are continuing to attract investor interest, leading to a clear division in market behavior, according to an analyst.
According to BERNAMA News Agency, at 3:51 pm, Brent crude rose to US$94.68 per barrel from US$71.57 on July 1, 2026. SPI Asset Management managing partner Stephen Innes highlighted that the increase in oil prices is driving up U.S. inflation expectations and treasury yields, thereby tightening global financial conditions and impacting sectors outside the AI and technology sphere.
Domestically, Innes noted that while oil and certain technology companies might benefit from this trend, higher yields are still burdening the broader market. "It is increasingly a dispersion trade, with the broader tape struggling amid a basket of oil and tech beneficiaries," he informed Bernama.
Innes also suggested that Brent crude oil could surpass US$100 per barrel as tensions rise across major Gulf export routes due to escalating geopolitical issues. The Strait of Hormuz is identified as the main chokepoint, with renewed threats from the Houthis in the Red Sea also affecting alternative routes. "In the current setup, oil could very well push above US$100, particularly with Western inventories already nearing tank-bottom levels. China's softer demand and large stockpiles may hold the line initially, but they are unlikely to offset a prolonged regional supply shock, especially if global inventory buffers continue to erode," he added.
In terms of government strategies to manage rising energy costs, CGS International Securities Malaysia chief economist Nazmi Idrus explained that the recent oil price spike might increase subsidy costs for the government. However, recent reforms, particularly in diesel rationalization, are expected to mitigate the subsidy increase resulting from the current fuel price hike. He mentioned that fiscal recalibration could already be in progress to manage the current cost shock through cost-cutting in other ministries and by collecting higher non-tax revenues. "Despite all this, I believe that the fiscal deficit target of 3.5 percent of gross domestic product (GDP) as stated in Budget 2026 can still be achieved because the GDP has been outperforming lately," he stated.
The Department of Statistics Malaysia (DOSM) reported last Friday that Malaysia's economy grew by 5.8 percent in the second quarter of 2026, following a 5.4 percent growth in the previous quarter. This performance was supported by growth in almost all economic sectors, except for the agriculture sector, which experienced a contraction.