As fuel prices are expected to fall in June, reflecting lower global oil prices that have been observed throughout May, residents of the United Arab Emirates can expect some relief at the petrol pumps. It follows from a period of high prices driven by geopolitical tensions and supply constraints.
Brent crude oil prices varied widely between $82 and $83 a barrel for May 2024, with an average price of $84.35, which is notably lower than the April level of $87.79.
This decrease was largely due to a strong supply of crude oil and lower demand in Asia, which eased the rising pressure on prices.
It is expected that the reduced prices will be announced soon by the Fuel Price Committee of the United Arab Emirates, which revises retail petrol prices at the end of each month in line with global crude oil prices as part of its liberalisation policy.
Due to geopolitical tensions in the Middle East, the price of petrol in the United Arab Emirates increased for the fourth consecutive month in May. The price of Super 98 was Dh3.34 per litre, Special 95 at Dh3.22 a litre and E+Plus at Dh3.15 for litres which marked the highest prices in 7 months.
According to Mr. Valecha, Century Financial’s Chief Investment Officer, the price of oil rose earlier this year as tensions in the Middle East and production cuts by OPEC and its allies pushed up prices.
But in view of the abundance of supplies from nonOPEC countries as well as falling Asian demand, prices have been declining since April. Valecha pointed out that the OPEC+ meeting on Sunday will take place online, which is expected to extend its production cuts in the second half of 2024.
In her note, Ipek Ozkardeskaya, a senior analyst at Swissquote Bank pointed out that further oil price gains are underpinned by the present political landscape, notably increased US demand over the summer and OPEC’s cautiously anticipated outlook. Moreover, oil and commodity prices could be further supported by China’s major investment to strengthen its real estate market.
However, Ozkardeskaya pointed out that there was a risk that the oil demand outlook would be negatively affected if the central banks decided to moderate their rate cut plans, which would limit any significant recovery in prices.
As the United Arab Emirates prepares to revise fuel prices, consumers and businesses alike are hoping for a reduction in recent high costs, reflecting the broader trends in the global oil market.
