Speaking to FMT, Ideas external relations manager Azrul Mohd Khalib said the cut in production could result in an increase in the national deficit since the country would be exporting less crude oil while importing it at higher prices.

Furthermore, oil consumption was not expected to drop any time soon, he added.

He noted a finance ministry disclosure in 2014 that Malaysia had become a net importer of crude oil and petroleum products.

“I would not be surprised if the government decides to recalibrate the 2017 budget in the first few months of next year,” he said.

Opec and non-Opec countries agreed last month to cut their output in the face of an oversupply of crude oil. Yesterday, Petronas announced that it would cut output by up to 20,000 barrels per day in 2017. Between January and March this year, Malaysia’s crude oil output averaged at 676,000 bpd.

Azrul said Malaysia could, in the long run, benefit from the agreement as it would help stabilise the global oil market and make way for higher oil prices.

“With this agreement in place and with everyone cooperating, oil could surge up to even US$57 per barrel in 2017,” he said.

He also said Malaysia would see an increase in receipts from exports of liquefied natural gas (LNG). The country is a major net exporter of LNG.

Petronas to cut daily output by up to 20,000 barrels per day