KUALA LUMPUR (Nov 3): Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar believes that oil prices, which has been in a slump since the second half of 2014, will rebound in two to three years.

“My view is that there is fluctuation in the global oil prices, but we do see oil prices going up, due to supply and demand in the medium term.

“I don’t think it’s possible for oil price to go below US$40 per barrel. If the price is too low, there will be less supply and the price will go back up.

“Predicting the future isn’t easy, but I like using futures (market) prices and I believe in two to three years, the price will go back up,” said Abdul Wahid, but did not specify what the likely price would be.

He was speaking at a press conference, after launching Malaysia’s Software Testing Hub’s Quality Centre of Excellence here today.

Touching on whether or not Malaysia needs a contingency plan in the event the global economy slows further, Abdul Wahid said they will implement the measures announced by Prime Minister Najib Razak during the tabling of Budget 2016 at Parliament, a couple of weeks ago.

“We continue to monitor global developments. We can’t predict what is going to happen with certainty, so what we need to do is to increase our resilience. We do that by diversifying our economy.

“For instance, we have reduced our dependency on commodities to 18%. We have also enhanced the diversity of our exports market, where a quarter (of our exports) goes to ASEAN, China takes up 13%, while the US and Japan take up 9%. We have no dependency on any single country,” he stressed.

He added that the nation has also diversified its revenue streams, including through the introduction of the goods and services tax, and have been scaling back its dependency on oil as well.

When asked if the government will undertake any special measures to assist oil and gas (O&G) players in this troubling times, Abdul Wahid said that in a period of low oil prices, the upstream market is more affected compared to downstream market.

“Upstream O&G providers are affected to some extent, but they have to make adjustment in line with the oil price. We do encourage consolidation among industry players. When the industry players are consolidated, they can lower their cost and have better sustainability,” he said.