UAE petrol prices defy expectations with surprise drop in November

UAE petrol prices will decline in November, the first reduction in four months, defying expectations after global oil markets posted a sharp rise in October amid elevated tensions in the Middle East.

The cost of Super 98 petrol will drop to Dh4.16 a litre, down 5.5 per cent, while Special 95 decreases by 5.6 per cent to Dh4.04.

E-Plus 91 will fall 5.7 per cent a litre to Dh3.97, while diesel at Dh4.75 is down 1 per cent. Prices are still up by about 80 per cent compared to February, before the Iran war started.

How much will fuel cost in October?

Super 98: Dh4.16, from Dh4.40 in October

Special 95: Dh4.04, from Dh4.28

E-Plus 91: Dh3.97, from Dh4.21

Diesel: Dh4.75, from Dh4.80

The cost of fuel in the UAE has been tied to the global oil market since 2015, when deregulation was introduced. Traditionally, petrol prices have moved in sync with those benchmarks, but not all the time.

Several factors influence monthly fuel costs, and, although the mechanisms for setting these prices vary by nation, governments can also help control high prices at the pump.

Crude prices on Friday settled at hit six-month highs and posted a fourth straight monthly increase in October. Brent, the benchmark for two thirds of the world's crude, was up 2.4 per cent at $117.64 a barrel, after briefly touching $118. The more active January futures contract added 2.37 per cent to $113.43 per barrel. West Texas Intermediate, the gauge that tracks US crude, gained 2.08 per cent to settle at $104.12 a barrel.

For the week, both Brent and WTI increased by about 0.8 per cent. On a monthly basis, the benchmarks spiked by about 15 per cent and 12 per cent, respectively, for their highest levels since April.

Analysts previously told The National that they expected UAE pump prices to rise again in November, saying that the recovery in Middle East oil supplies does not immediately translate into a return to normality for the energy market.

Vessel attacks on the Strait of Hormuz and Houthi attacks on Saudi Arabia, plus the possibility of the US renewing hostilities on Iran, have kept markets on edge.

"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," Ahmed Zaheer, a consultant at Dubai-based Qamar Energy, told The National.