Cheer for O&G stocks amid Middle East counterattack

 

Moody’s Analytics has warned a further escalation in the Iran-Israel conflict could result in oil prices surging to more than US$100 per barrel. (AFP pic)

PETALING JAYA: While the world has been gripped by the escalating crisis in the Middle East, oil and gas counters on Bursa Malaysia has been riding the wave of steadily rising oil prices.

Energy stocks rose for the third straight trading day even as a sea of red engulfed the local bourse. The Bursa Malaysia Energy Index rose as much as 1.7% while the FBM KLCI slipped about 0.5% in morning trade.

Brent crude oil had risen past US$90 per barrel as Iran launched strikes on Israel over the weekend in retaliation over Israel’s airstrike on the Iranian consulate in Syria on April 1. Brent crude oil futures were relatively stable today, down 1.1% to US$89.45 at 5.35pm.

Moody’s Analytics has warned that an escalation in the conflict which may see Israel forcefully responding to Iran’s counter attack could result in oil prices surging to more than US$100 per barrel.

Prices of some energy stocks had already run up in anticipation of Iran’s strike. Oil producer Hibiscus Petroleum, seen as a direct proxy of oil prices, rose as much as 12 sen or 4.29% to a one-year high of RM2.92 in morning trading today.

Petroleum products manufacturer Hengyuan Refining Company Bhd gained as much as 10 sen or 3.21% to RM3.22.

Dialog Group Bhd, the largest energy counter with a market capitalisation of RM13.2 billion, was up 3 sen or 1.3% to RM2.35. O&G services provider Carimin Petroleum Bhd was up as much as 6 sen or 7% to 92 sen.

Services provider Dayang Enterprise Holdings Bhd rose 5 sen or 2% to RM2.49 while energy infrastructure company Wasco Bhd, formerly known as Wah Seong Corp Bhd, increased 6 sen or 4.6% to RM1.36. However, energy infrastructure and renewables group Yinson Holdings Bhd’s shares were unchanged at RM2.38.

In its commentary note, Moody’s Analytics said now that the attack has happened, it expects oil prices to add another US$5 per barrel to the risk premium, pushing oil to the US$90 to US$95 per barrel range.

“From here, there are two possible scenarios. The most likely is a measured and restrained response from Israel that de-escalates tensions, in line with pressure from the Biden administration in the US and the wider global community.

“That would see the US$10 per barrel risk premium fade over the next few weeks. The second, and far more damaging scenario would see an escalation in the conflict as Israel forcefully responds to the attack,” it said, adding oil prices could then jump to more than US$100 per barrel.

At the close, the Bursa Malaysia Energy Index ended 0.27% lower at 969.09 points with most O&G stocks paring earlier gains. - FMT