OCBC revises Brent forecast to US$67 per barrel, expects CPO at RM4,300 per tonne
KUALA LUMPUR: The escalating trade war will have an impact on global commodity prices, according to OCBC chief economist Selena Ling.
The downward prices on Brent and WTI crudes since the start of the tariffs escalations has led OCBC to revise down its 2025 Brent oil forecast to US$67 per barrel from US$77, implying lower oil prices for the rest of the year.
This is mainly on account of weaker demand and higher-than- expected supplies from the OPEC+ alliance.
However, for crude palm oil, OCBC expect similar prices of RM4,300 per tonne in 2025 compared to RM4,218 per tonne in 2024.
This reflects relatively stable supply conditions even as amid less certain demand outcomes and ongoing domestic policy changes namely for Indonesia's B40, Ling said at a press conference here today.
She said the Malaysian economy entered the current period of global economic turbulence on strong footing.
The economy grew a clip of 5.1 per cent year-on-year in 2024 and incoming data suggests resilient, albeit slightly moderating growth for for the first quarter, she added.
"US President Donald Trump's tariff announcements have jolted economies into understanding that trading relationships will change substantially from the current status quo.
"Importantly, no economy is off limits particularly if the US has a persistent trade deficit with it."
Ling said the US has had a persistent trade deficit with Malaysia since as early as 2000 and was a cumulative US$24.8 billion in 2024.
This contributed to a "discounted" reciprocal tariff calculation of 24% imposed on US imports from Malaysia effective April 5. The decision is paused for 90 days from April 9.
Notwithstanding the outcome of its negotiations with the US, Ling said Malaysia's reciprocal tariff rate at 24 per cent is lower compared to regional peers such as Vietnam (46 per cent), Cambodia (49 per cent), Thailand (37 per cent) and Laos (48 per cent), allowing it to maintain its relative competitiveness for firms still geared to export to the US.
Moreover, for firms that have adopted a "China +1" strategy, the relative attractiveness of Malaysia remains higher compared to China's 145 per cent tariff rate.
"But this is not the end of tariff road for Malaysia. The exemptions of semiconductors and associated products has provided some temporary reprieve - about 46 per cent of Malaysia's exports to the US are still exempt from tariffs based on latest regulations as of April 14.
"These include electronics and electrical appliances products, including electronic integrated circuits, photovoltaic cells, communication apparatus and automatic data processing machines."
Importantly, she added, the Trump administration has not ruled out the imposition of semiconductor tariffs, which is a large overhang for the economy.
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