DURING the first week of February 2026, energy markets witnessed a dramatic divergence between Brent Crude and natural gas.
While the crude oil markets wrestled with geopolitical uncertainty, Natural Gas recovered from an absolute freefall following one of the most volatile winter cycles in recent history.
Brent crude spent the week inching upwards, eventually closing around $68.05 per barrel driven by the high-stakes diplomatic activities in Oman fueling a “war premium” in crude prices.
Natural gas prices however traded rangebound during the week as it moved between USD3.30 – USD3.60pMMBtu.
“Despite the volatility for the sector, we maintain a Neutral stance, and our top pick is Dialog Group,” said MBSB Research.
Given the expectation of weakening crude oil prices in 2026, MBSB retains a Neutral position on the sector.
MBSB anticipates limited upside potential due to a forecasted 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.
“We recommend adopting a wait-and-see approach before considering any purchases on dips,” said MBSB.
Meanwhile, Petronas unlocks 10 mil barrels in Sabah, signalling investor confidence. Malaysia Petroleum Management (MPM) and PETRONAS have announced the award of the Production Sharing Contract (PSC) for the Permata Cluster off the coast of Sabah.
The cluster is expected to unlock approximately 10 mil barrels of oil equivalent (MMboe) of untapped resources, with first commercial production targeted as early as 2029.
The Mutiara Cluster, awarded under an SFA PSC to DIALOG Resources Sdn Bhd in June 2025, is expected to catalyse future gas and oil monetisation in Sabah’s eastern corridor, stimulate economic activity and reinforce the state’s position as a key energy growth hub.
These developments form part of a broader Joint Task Force involving PETRONAS and Sabah state agencies, aimed at accelerating upstream and downstream projects along the Sabah East Coast.—Feb 10, 2025
Main image: Petrosync
