UAE fuel prices at all-time high

dubai — In line with the rising prices in international markets, the UAE’s Ministry of Energy and Industry’s Fuel Price Committee on Monday increased petrol prices for the month of June, reaching its highest level since the UAE announced deregulation in 2015.

Analysts believe that the increase in fuel prices will result in hike in inflation but falling rentals and some corporates absorbing recently-introduced VAT will help absorb some impact of the inflation.

The price of 98 Unleaded petrol (Super) has been increased from Dh2.49 per litre in May to Dh2.63 in June, an increase of 14 fils or 5.6 per cent.

The price of 95 Unleaded (Special) has been raised by 14 fils, or 5.9 per cent, from Dh2.37 to Dh2.51. Moreover, the price of 91 Unleaded (E-Plus) will also rise by 14 fils from Dh2.30 in May to Dh2.44 in June.

Moreover, the diesel price for the month of June has been set at Dh2.71 for the next month as compared to Dh2.56 for this month. Monica Malik, chief economist, Abu Dhabi Commercial Bank, said the rise in fuel prices in June will put an additional pressure on consumers along with the introduction value-added tax in January 2018.

“We have seen some drop in inflation in March but it started rising again in April and May. The continued upward trend of fuel prices in June will increase inflation in the country. The positive development is the discussion between Opec group and Russia to increase production and that could be a good sign,” Malik said.

She pointed out that falling rents and some corporates absorbing the VAT are helping the consumers against the rising fuel prices and inflation. Brent and WTI were trading at $75.4 and $66.88 per barrel — respectively — at 4.50pm UAE time on Monday. Both had lost nearly one per cent after Saudi Arabia and Russia announced on Friday that they were discussing the possibility of raising oil production by some one million barrels a day. In addition, the uptick in US crude production, prompted steep declines in crude futures last week.

According to Bank of America Merrill Lynch analysts, oil prices in the UAE will peak in mid2019. The analysts expect Brent crude oil prices to trend gradually higher, hitting an average of $80 per barrel by mid-2019 before gradually trending lower to an average of $71 a barrel by end-2019. This amounts to approximately a $20 appreciation in crude oil from the end of last year to the peak in the outlook.

— waheedabbas@khaleejtimes.com

The continued upward trend of fuel prices in June will increase inflation in the country Monica Malik, chief economist, Abu Dhabi Commercial Bank