UAE to announce fuel prices for June: Why petrol prices are likely to drop

UAE fuel prices

Fuel prices in the UAE are anticipated to decline in June, reflecting a period of subdued global oil prices throughout May. Brent crude oil traded predominantly between $82 and $83 per barrel in May 2024, averaging $83.35 compared to April's average of $88.79. This drop in prices is largely due to an abundant supply of crude oil and weaker demand from Asian markets.

The UAE Fuel Price Committee reviews and adjusts retail petrol rates at the end of each month to align with global crude prices, in line with the country's deregulation policy. In May, the prices for petrol increased for the fourth consecutive month due to geopolitical tensions in the Middle East, which had driven global rates higher. Specifically, Super 98 was priced at Dh3.34 per liter, Special 95 at Dh3.22 per liter, and E-Plus at Dh3.15 per liter, marking the highest prices in the last seven months.

Vijay Valecha, Chief Investment Officer at Century Financial, commented that oil prices had risen this year because of Middle Eastern geopolitical tensions and production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies. Despite these factors, prices have softened since early April due to abundant supply from outside the OPEC+ group and weaker demand in Asia. OPEC+ is expected to meet online on Sunday to likely maintain its output curbs into the latter half of 2024.

Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, explained that the current geopolitical setup supports further gains in oil prices, alongside rising US demand heading into summer and OPEC's restrictive stance. Additionally, China's significant spending to support its struggling property market is boosting oil and commodity prices. However, Ozkardeskaya warned that a major risk to oil prices rebounding above $80 per barrel could come from central banks potentially holding off on planned rate cuts, which would dampen the demand outlook for oil.

Over the past year, the trend in fuel prices in the UAE has shown significant fluctuations. For instance, Super 98 was priced at Dh2.78 per liter in January 2023, reaching Dh3.34 per liter by May 2024. Similar trends were observed for Special 95 and E-Plus 91, with their prices moving in tandem with global oil prices and geopolitical developments.

As the global oil market continues to experience fluctuations driven by supply dynamics and regional demand shifts, UAE consumers can look forward to a reduction in fuel costs for June, providing some relief from the elevated prices experienced in recent months.