Oil Price Spike Splits Global Markets As AI And Chip Stocks Attract Investors -- Analyst

By Engku Shariful Azni Engku Ab Latif

KUALA LUMPUR, July 22 (Bernama) -- While the Brent crude oil price hike would harm the global market, some heavy indexes of artificial intelligence (AI) and semiconductor beneficiaries are still attracting flows, creating a sharp split beneath the surface, an analyst said.

At 3.51 pm, Brent crude surged to US$94.68 per barrel from US$71.57 on July 1, 2026. 

SPI Asset Management managing partner Stephen Innes said higher oil prices are pushing US inflation expectations and treasury yields higher, which tightens global financial conditions and weighs on sectors outside the AI and technology complex. 

Back home, he said while oil and selected technology companies may benefit from the trend, higher yields are still a drag on the broader market. 

"It is increasingly a dispersion trade, with the broader tape struggling amid a basket of oil and tech beneficiaries," he told Bernama.

Innes said Brent crude oil could reach above US$100 per barrel as pressure builds up across both major Gulf export routes, due to escalating geopolitical tension.

He said the Strait of Hormuz remains the central chokepoint, while renewed Houthi threats in the Red Sea are also threatening the alternative corridor. 

"In the current setup, oil could very well push above US$100, particularly with Western inventories already nearing tank-bottom levels. 

"China’s softer demand and large stockpiles may hold the line initially, but they are unlikely to offset a prolonged regional supply shock, especially if global inventory buffers continue to erode," said Innes.

 

Govt Strategies to Navigate Rising Energy Costs

 

CGS International Securities Malaysia chief economist Nazmi Idrus said while the recent oil price spike could add pressure to the subsidy cost to the government, the recent reforms, especially diesel rationalisation, is likely to reduce the subsidy upside of current fuel price hike. 

He said fiscal recalibration may have already been underway to try to manage the current cost shock through cost cutting on other ministries as well as collecting higher non tax revenues. 

"Despite all this, I believe that the fiscal deficit target of 3.5 per cent of gross domestic product (GDP) as stated in Budget 2026 can still be achieved because the GDP has been outperforming lately," he said.

Last Friday, the Department of Statistics Malaysia (DOSM) reported that Malaysia’s economy expanded by 5.8 per cent in the second quarter of 2026, following a 5.4 per cent growth in the preceding quarter.

The performance was supported by growth in almost all economic sectors, except for the agriculture sector, which experienced contraction.  

-- BERNAMA