KUALA LUMPUR (Dec 3): Malaysia will announce after a ministerial meeting with the Organisation of Petroleum Exporting Countries (OPEC) on Thursday whether it will continue to cut oil production by 20,000 barrels per day beyond 2018, said Economic Affairs Minister Datuk Seri Mohamed Azmin Ali. 

He said the decision will be announced at the meeting, which will also be attended by non-OPEC ministers, in Vienna, Austria, on Thursday. 

Malaysia, a non-OPEC country, had undertaken to cut oil production by 20,000 barrels per day up to December 2018. 

Azmin, who will attend the Vienna meeting, had also brought up the idea of formalising the undertaking among both OPEC and non-OPEC countries.  

“We are going to discuss whether we want to keep that understanding, or alleviate that understanding to a more formal type of cooperation,” Azmin told reporters at the Parliament building today.  

The ministerial meeting is held bi-annually for oil-producing countries to discuss on steps to stabilise oil price. Such steps — including production cut — have helped Brent crude oil price futures to gradually increase from under US$50 per barrel in 2016 to above US$80 in October 2018. 

However, prices tumbled to below US$60 last week amid an emerging supply glut, following a global surge in production in oil heavyweight countries such as the United States, Russia and West Asian nations.   

The issue of oil price is now particularly important for Malaysia, which has indirectly increased its dependency on oil revenue, having terminated the goods and services tax (GST) in favour of the older sales and services tax (SST) — a step that pundits expect would reduce government’s tax revenue by some RM20 billion.  

Malaysia’s Budget 2019 has assumed oil price at an average of US$70 per barrel next year. The previous administration has stated in Parliament that a US$1 increase in oil price would increase contribution to the government’s coffers by some RM300 million.  

When asked whether the government has to recalibrate Budget 2019 at current oil price levels, Azmin said: “I do not want to jump into conclusion”. At press time, Brent crude is trading at US$62.42.