What Is The Crude Oil Price In RM Term?

Every Malaysian knows world crude oil price drop significantly since it hit the high of around 147.50. However not all Malaysian knows what is the crude oil price in RM term as it is measured in barrel term.

First of all, crude oil prices differ in different markets such as New York Mercantile Exchange(NYMEX), Intercontinental Exchange(ICE) etc. NYMEX crude oil widely considered as the benchmark of world crude oil price so I will use NYMEX crude oil in our calculation.

NYMEX crude oil price (currently) = USD 61.72

In RM term = USD 61.72 x 3.571
= RM 220.4

1 barrel = 115.6 litres

So, 1 litre of crude oil(RM) = RM 220.4/115.6
= RM 1.91 (compare to market price of RM 2.30)

Crude oil price on 1st Oct. 2008 = USD 98.53/barrel
= RM 3.04/litre

Average between 1st Oct. 2008 and now = (1.91 + 3.04)/2
= RM 2.475

According to CNBC.com, crude oil price may fall below USD 50/barrel as slower demand as a result of global recession.

Malaysia government officials said petrol price (RON97) cut will not exceed RM0.15. It mean petrol price won't go below RM 2.15

So if current NYMEX crude oil price stand till end of the month, it will be at RM 1.91/litre and October average is RM 2.475/litre.

However Malaysia is a oil producing country so there will be subsidy given by government to Malaysian like other oil producing countries.

RM 2.475 (NYMEX crude oil price - Oct. average) - RM 2.15 (if government cut petrol price by RM 0.15) = RM 0.325(Subsidy by Malaysia Government and Petronas)

So next time you wanna calculate the petrol price in RM term, use the formula above. At least you know what is the resonable price level of petrol prices.