Introduction Of UAE
The UAE Fuel Price Committee is set to lower petrol prices for June, following a global trend of subdued oil prices. This expected decrease comes after global oil prices traded lower in May, primarily due to an abundant crude supply and weaker demand in Asia.
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Globally, Brent crude prices mostly ranged between $82 and $83 per barrel in May 2024, with an average of $83.35 per barrel. This is a notable decrease compared to April’s average of $88.79 per barrel. Factors contributing to this drop include an ample supply of crude oil and reduced demand from key Asian markets.
In the UAE, the Fuel Price Committee adjusts retail petrol rates monthly, aligning them with global crude prices as part of a deregulation policy. This ensures that local fuel prices reflect international market conditions, providing a transparent and responsive pricing mechanism.
In May, petrol prices in the UAE saw their fourth consecutive increase due to geopolitical tensions in the Middle East, which had previously driven global rates higher. During this period, Super 98 petrol was priced at Dh3.34 per litre, Special 95 at Dh3.22 per litre, and E-Plus 91 at Dh3.15 per litre. These rates were the highest recorded in the past seven months.
Vijay Valecha, Chief Investment Officer at Century Financial, explained the dynamics behind the oil price movements. “Oil prices have risen this year due to tensions in the Middle East and production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies. However, since early April, prices have softened due to an abundant supply outside the OPEC+ group and weaker demand in Asia,” Valecha noted. He also highlighted that OPEC+ is expected to maintain its production curbs into the second half of 2024, which may influence future pricing.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, pointed out that the geopolitical landscape and rising US demand during the summer are supportive of potential gains in oil prices. She added, “China’s substantial spending to support its struggling property market also provides support to oil and commodity prices. While sentiment in the oil market is generally optimistic, there is a risk if central banks do not follow through with expected rate cuts, which could dampen the demand outlook and limit oil price recovery.”
Historical data on UAE petrol prices shows fluctuating trends over the past year:
| Month | Super 98 (in AED) | Special 95 (in AED) | E-Plus 91 (in AED) |
|---|---|---|---|
| January 2023 | 2.78 | 2.67 | 2.59 |
| February | 3.05 | 2.93 | 2.86 |
| March | 3.09 | 2.97 | 2.90 |
| April | 3.01 | 2.90 | 2.82 |
| May | 3.16 | 3.05 | 2.97 |
| June | 2.95 | 2.84 | 2.76 |
| July | 3.00 | 2.89 | 2.81 |
| August | 3.14 | 3.02 | 2.95 |
| September | 3.42 | 3.31 | 3.23 |
| October | 3.44 | 3.33 | 3.26 |
| November | 3.03 | 2.92 | 2.85 |
| December | 2.96 | 2.85 | 2.77 |
| January 2024 | 2.82 | 2.71 | 2.64 |
| February | 2.88 | 2.76 | 2.69 |
| March | 3.03 | 2.92 | 2.85 |
| April | 3.15 | 3.03 | 2.96 |
| May | 3.34 | 3.22 | 3.15 |
As the UAE prepares to announce the new fuel prices for June, motorists can anticipate a relief at the pump, reflecting the global trend of lower oil prices. This adjustment aligns with the country’s commitment to market-driven pricing and ensures that consumers benefit from favorable changes in the global oil markets.
