Rising UAE Fuel Costs: Petrol Prices Surge 8% in June

In June, UAE drivers are confronted with increasing petrol prices, marking the fourth month in a row of rises. This month, petrol prices surged by almost 8%, while diesel costs saw a notable drop.

The new rates show a hike of 7.9% to 8.0% for Super 98, Special 95, and E-Plus 91 petrol. Conversely, diesel has decreased by 7.7%.

While fuel costs continue to escalate, the rise in June is more moderate compared to the steep hikes of April and May, indicating a possible easing of price pressures.

Higher Fuel Costs Than Earlier This Year

Despite recent signs of stabilization in global oil markets, UAE motorists are still facing significantly elevated prices compared to early 2023.

For instance, the cost of Super 98 petrol has jumped from Dh2.45 per litre in February to Dh3.95 per litre in June, reflecting an approximate increase of 61%.

For vehicle owners, this is significant:

• A 60-litre sedan that once cost Dh147 to fill now costs Dh237, leading to a Dh90 rise per tank.

• An 80-litre SUV has seen its fill cost increase from Dh196 in February to Dh316, an extra Dh120 per refill.

Compared to May, filling up a 60-litre tank with Super 98 now costs about Dh17.40 more, while an 80-litre SUV costs around Dh23 more per fill.

Motorists who refill multiple times monthly are continuing to face noticeably inflated fuel expenses compared to earlier in the year.

Global Oil Prices on a Downward Trend

The recent increase in UAE fuel prices comes despite a global drop in crude oil prices.

Earlier this year, concerns regarding potential disruptions in the Strait of Hormuz pushed Brent crude prices to over $110-$120 per barrel. However, oil prices have recently decreased to around $91-$95 per barrel.

This decline has been bolstered by optimism surrounding US-Iran negotiations and expectations of a lasting regional ceasefire. Consequently, panic-driven buying in oil markets has abated significantly.

Although oil prices remain higher than at the beginning of the year, market conditions have stabilised.

UAE Fuel Prices Remain Competitive Worldwide

Even with the latest price rise, petrol costs in the UAE still fall below those in numerous major international markets.

The global average petrol price is approximately $1.54 (Dh5.7) per litre, based on international fuel price monitoring.

Several countries continue to experience heightened fuel prices:

• In the US, petrol prices exceed $5 per gallon in many areas.

• European nations continue facing higher fuel prices due to taxes and VAT.

• South Africa increased petrol prices by R1.43 per litre in June.

• Bangladesh raised petrol and octane prices by BDT5 per litre to align local prices with global market shifts.

• The Philippines cut fuel prices for petrol and diesel during the same period.

The UAE operates a market-linked fuel pricing system, meaning local prices are adjusted according to global oil market fluctuations, rather than being set by the government.

Reasons Behind Rising Fuel Prices

Fuel prices in the UAE are determined by average global oil prices from the previous month.

Though crude oil prices began to decrease towards the end of May, costs remained high for much of the month. This high average price continued to affect the fuel rates for June.

The Strait of Hormuz remains a critical factor, with around 20% of global oil supplies passing through this vital shipping lane, making energy markets very sensitive to any changes in regional stability.

Will Fuel Prices Drop Next Month?

Experts suggest that June could represent a turning point for fuel prices.

If Brent crude stabilizes around $90 per barrel without exceeding $100, UAE fuel prices may face downward pressure in the coming months.

April and May reflected the peak impact of regional disruptions on global oil dynamics. While prices remain high compared to early 2023, June's smaller rise may suggest the period of rapid increases is winding down as crude oil prices retreat from their recent peaks.