Asian markets may look stable, but the underlying story has changed and investors need to pay attention. Asian stocks steady despite peace deal progress Oil falls to ~US$75–78/barrel US-Iran ceasefire extended by 60 days Nikkei hits record highs on AI momentum US stocks fall as rate hike expectations rise Bond yields moving higher again The oil story is getting better, but the interest-rate story is becoming more challenging. Oil Is No Longer the Main Risk With the peace deal in place: Supply disruption fears are easing Oil flows are expected to gradually resume Risk premium is being priced out Lower oil = easing inflation pressure This is a positive shift for markets especially for energy-importing economies. But Rates Are Taking Over At the same time: The Fed is leaning more hawkish Markets are pricing possible rate hikes Bond yields are rising Higher rates are now the dominant driver This is why: US equities pulled back Growth stocks are und...
Malaysian energy stocks are hitting their peak, but the real shift is happening beneath the surface.
Key Points
- Energy earnings likely peak in 2Q2026
- Oil stabilising around ~US$80/barrel
- Geopolitical risk premium is fading after US-Iran deal
- Earnings to gradually ease from July onwards
- Sector remains overweight, but momentum is slowing
The oil story is no longer about war risk, it’s about how quickly supply returns and whether demand is strong enough to keep prices near US$80.
From War Rally to Normalisation
The past few months were driven by:
- Supply disruptions
- Shipping constraints
- Risk premium from Middle East tensions
Now, that narrative is shifting:
- Supply is gradually returning
- Production is coming back online
- Logistics are normalising
The energy sector is transitioning from a geopolitical-driven rally to a normalisation phase
Why Oil Won’t Crash (Yet)
Even with peace developments:
- Infrastructure repairs take time
- Tanker flows recover gradually
- Supply chains don’t reset overnight
Oil is unlikely to collapse immediately and stability around US$80 is realistic in the near term
Earnings Outlook: Peak → Moderate, Not Collapse
- 2Q captures peak spreads and margins
- From 3Q onwards → earnings ease, but remain healthy
Energy companies can still generate strong profits even as growth slows
Where the Opportunity Is Shifting
MISC Bhd as a key name:
- Contracted business → earnings visibility
- ~35% spot exposure → benefits from tanker rates
- Tight vessel supply + longer routes → supports shipping demand
Tanker players may continue outperforming even as oil stabilises
What Drives Oil Next
The next phase is no longer about geopolitics.
It comes down to:
- Global economic growth
- China’s demand recovery
- Industrial and energy consumption trends
Demand — not war — becomes the key driver
Key Takeaway
- Q2 likely marks peak earnings for the sector
- Shift from momentum → stability and selectivity
- Oil remains supported, but upside is limited
- Focus on defensive, cashflow-visible names
The easy gains from the oil rally are behind us, the next move depends on demand strength, not geopolitical headlines.
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