UAE Fuel Prices Unexpectedly Fall in November, Reversing Trend Amidst Middle East Tensions

In a surprising turn of events, the UAE is set to experience a decrease in petrol prices for November, marking the first reduction in four months. This move defies earlier expectations, which anticipated a rise following a significant increase in global oil markets during October, largely driven by heightened tensions in the Middle East.

The price of Super 98 petrol will now be Dh4.16 per litre, a 5.5 per cent decrease. Special 95 will see a 5.6 per cent drop to Dh4.04 per litre, while E-Plus 91 will be available for Dh3.97 per litre, down 5.7 per cent. Diesel prices will also be affected, falling by 1 per cent to Dh4.75 per litre.

Despite this November reduction, fuel costs remain approximately 80 per cent higher than they were in February, prior to the commencement of the Iran war. For comparison, October prices were: Super 98 at Dh4.40, Special 95 at Dh4.28, E-Plus 91 at Dh4.21, and Diesel at Dh4.80.

Since the deregulation introduced in 2015, the UAE's fuel prices have been closely linked to the global oil market. While typically mirroring international benchmarks, this relationship is not always direct, as various factors influence monthly fuel costs. Governments can also play a role in managing pump prices.

The global oil market saw crude prices reach six-month highs on Friday, concluding October with a fourth consecutive monthly increase. Brent crude, a global benchmark, rose 2.4 per cent to $117.64 a barrel, briefly touching $118. The January futures contract for Brent added 2.37 per cent, settling at $113.43 per barrel. West Texas Intermediate (WTI), a US crude gauge, gained 2.08 per cent to $104.12 a barrel. Over the week, both Brent and WTI saw gains of about 0.8 per cent. On a monthly basis, these benchmarks surged by approximately 15 per cent and 12 per cent, respectively, reaching their highest levels since April.

Analysts had previously anticipated a price increase for UAE pump fuel in November, suggesting that the recovery in Middle East oil supplies would not immediately stabilize the energy market. Geopolitical events, including vessel attacks in the Strait of Hormuz, Houthi attacks on Saudi Arabia, and the potential for renewed US hostilities against Iran, have contributed to market uncertainty.

Ahmed Zaheer, a consultant at Qamar Energy in Dubai, commented, "Persistent geopolitical risks and higher freight costs support [an] outlook [for higher oil prices], while resilient supply, weaker demand and the prospect of a diplomatic breakthrough could limit further increases."