Low Oil Prices in Malaysia Causes
Microsoft’s Antitrust Case
October 25, 2022Theory of Value Summary and Analysis
October 25, 2022Low Oil Prices in Malaysia Causes
Introduction
Malaysia is become a net importer of oil since 2011. The volume of exported oil is still less than the volume imported oil for local consumption (V, 2014). Malaysia continue to be net exporters of Liquefied Natural Gas (LNG) products. When taken together with LNG only can say that Malaysia is a net exporter of oil and gas. The figure 1 below shown Malaysia oil production versus consumption between years 2008 to 2013.
Source:United States Energy Information Administration
Figure 1
Starting June 2014, global crude oil price was fall sharply and it will effect some sectors in Malaysia such as transportation, oil service company, and so on. In this report, we study that why the global crude oil price will drop sharply and which sectors are gain or loss during low oil price in Malaysia.
Objective
- To identify the cause of low oil price in Malaysia.
- To analyse which sectors are winners and loser of low oil price in Malaysia.
Causes of Low in Oil Price
The crude oil price has continuing to decline from US$ 115 a barrel in June of 2014 to around US$50 recently.The price of oil has thus fallen by approximately 50 per cent. The Figure 2 below shown the brent crude oil price changed since year 2014.
Figure 2
Oil prices fell sharply to their lower due to the production war between Organization of the Petroleum Exporting Countries (OPEC) and the United States (US) oil boom from shale oil producers. From mid of 2014, the United States has become a main producer of shale oil and gas. One of the main drivers of lower oil prices is gas and oil is extracted from shale formations using hydraulic fracturing or fracking. (Bowler, 2015)
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When oil prices began falling from second half of 2014, many expected OPEC to reduce production to support prices. Instead, OPEC’s decision to maintain output levels at 30 million barrels per day signalled a significant change in the cartel’s policy objectives from targeting an oil price band to maintain market share. This decision may cause to weak global demand and strong supply.
