The UAE Fuel Price Committee has announced a significant reduction in retail petrol prices for November. This decision is aimed at providing relief to the country’s consumers.
Fuel prices dropped by around 12 percent for all three petrol variants, including Super 98, Special 95, and E-plus 91. With these adjustments, the new prices per liter stand at AED3.03, AED2.92, and AED2.85, respectively.
The average global price of 95-octane petrol, Special 95 in the UAE, was AED4.91 and decreased to AED2.92 in November. This makes average petrol prices in the UAE cheaper by 40.5 percent compared to global average prices.
Inflation and economic impact
Petrol and diesel prices play a pivotal role in controlling inflation in the UAE. Other factors like housing, transportation, food and beverage, and education are also major contributors to inflation. However, transport alone accounts for nearly 13 percent of the total inflation weightage in the country, according to Trading Economics.
The reduction in petrol prices aligns with the UAE’s policy of revising monthly retail fuel prices since 2015. This falls in line with the aim of bringing local rates closer to global market trends.
World Bank projections
Yesterday afternoon, international crude oil benchmarks West Texas Intermediate (WTI) and Brent were trading at $81.54 and $85.59 per barrel, respectively.
Amid these developments, the World Bank has made projections related to the oil market. It stated that oil is expected to average $90 per barrel in the fourth quarter of this year but may fall to $81 in the following year.
However, the World Bank raised concerns regarding the impact of the Palestine-Israel conflict. The conflict could “push global commodity markets into uncharted waters” stated the World Bank.
If a significant disruption to global supply occurred, oil prices could surge to as high as $157 per barrel. The potential ramifications of such a scenario have garnered the attention of global markets and policymakers alike.
Read: UAE: OPEC+ eager to achieve stability, balance in the energy sector
UAE compared to the world
In July 2023, UAE fuel prices hit an all-time high, reaching AED4.63 per liter. The prices surged nearly 75 percent since January 2022, as Super 98 rose from AED2.65 per liter at the beginning of the year to AED4.63 in July. During that time, fuel prices in the UAE were still cheaper than in over 110 countries.
Generally speaking, richer countries have higher fuel prices compared to poorer countries. In oil-producing countries, oil and gas have significantly lower prices. One exception is the United States which is a rich country but has low fuel prices. Differences in retail fuel prices are due to several factors including differences in taxes and subsidies for fuel.
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