Petrol to cost two fils more, diesel up 12 fils

Ministry raises October fuel prices as global crude prices edge higher due to Iran sanctions

The Ministry of Energy slightly hiked fuel prices for October in line with the global crude oil prices which have been rising due to supply concerns following US sanctions on Iranian oil exports.

According to an announcement yesterday, Super 98 grade of fuel will increase to Dh2.61 per litre in October from Dh2.59 this month. Special 95 will rise to Dh2.50 per litre from Dh2.48 now. E plus 91 will be costlier by 1 fils at Dh2.41 per litre, up from Dh2.40.

The diesel price will go up by 12 fils to Dh2.76 per litre from Dh2.64.

Fuel prices were hiked as global crude oil prices trend higher due to the decision of the US government to reimpose sanctions on Iran, a top oil producer, that led to concerns about supply shortages in the market.

Drop in production

“We expect Iranian production to drop by around one million barrels per day because of the sanctions. This will tighten the oil market,” Spencer Welch, director of oil markets and downstream at London-based IHS Markit, told Gulf News.

Brent, the global benchmark was trading at a four-year high of $81.78 per barrel at 4.13pm UAE time yesterday. US crude West Texas Intermediate was at $72.25 per barrel.

Mercuria Energy Group and Trafigura Group, among the world’s biggest trading houses, are predicting the loss of Iran’s supply will boost prices to $100 a barrel for the first time since 2014. However, Welch feels that $100 per barrel is unlikely but not impossible.

“The oil market is tightening because of falling Iranian and Venezuelan production. Saudi Arabia and Russia are trying to increase production to compensate, but they can’t fully compensate for this loss, especially in the short term,” he said.

According to Welch, oil price will average $81 per barrel in 2019 compared with around $75 per barrel average for 2018.