Petrol to be costlier next month

MINISTRY INCREASES FUEL PRICES FOR THIRD MONTH IN A ROW

Ministry of Energy increases fuel prices for third month in a row as global oil prices inch higher |

The Ministry of Energy yesterday increased fuel prices for the third month in a row with petrol prices going up by three fils and diesel by 2 fils.

The new fuel prices per litre for March are: Super 98 — Dh2.03, up from Dh2 in February; Special 95 — Dh1.92, up from Dh1.89; E Plus-91 — Dh1.85, up from Dh1.82.

The diesel price has been increased to Dh2.02 per litre from Dh2.00 in February.

Fuel prices are linked to international oil prices which are currently trading higher following a historic agreement between Opec (Organisation of Petroleum Exporting Countries) and non-Opec countries to cut production by about 1.8 million barrels per day to stabilise oil prices.

Agreement

The agreement, which is valid for six months, came into effect from January 1 with most of the Opec member countries adhering to the pact to reduce output with Saudi Arabia cutting the most, followed by Iraq, the UAE and other Gulf countries.

The global benchmark Brent crude is trading at $56.60 per barrel and the US crude West Texas Intermediate at $54.44 per barrel yesterday at around 4pm UAE time.

Though oil prices are the most difficult to project, the prospects of oil prices heading upward are far better than the prospects of declining prices, according to Dr Mamdouh G. Salameh, an international oil economist based in London.

He said oil prices could hit $60 per barrel during the first half of this year rising further to between $60 and $70 per barrel by the second half due to rise in global oil demand and economic growth as projected by the International Monetary Fund.

Oil demand

“Global oil demand is projected to increase this year by 1.4 million barrels per day, according to the IEA [International Energy Agency] and secondly, the International Monetary Fund is expecting the global economy to grow this year by 3.5 per cent,” he said.

“In the course of oil price volatility, it is possible the price might drop below $50 per barrel for a short time but will rise significantly later.”

Opec and non-Opec members reached an agreement last year to limit production to about 1.8 million barrels per day with exemptions for Libya, Nigeria and Iran.

The deal is valid for six months and Opec member countries will gather in Vienna in May to decide whether to extend the deal.

Oil will stabilise around $55 (Dh202) to $65 a barrel as Opec fulfils its agreement to cut output, with stockpiles and shale production keeping prices from rising much more, the Middle East head of Lukoil said.

Russia’s second-largest oil producer hasn’t had to reduce production in Iraq as a result of the curbs pledged by Opec, Gati Al Jabouri said yesterday in a Bloomberg Television interview. Lukoil’s output in Iraq is about 400,000 barrels a day, he said. Opec’s cutbacks have brought a period of stability to the market, he said.

“We have a lid because of shale oil and we have a bottom because of the already proven decision and willingness of Opec to maintain prices at a reasonable level,” Al Jabouri said.

The Organisation of Petroleum Exporting Countries, working in concert with 11 other producers such as Russia, reached agreement last year to reduce output to clear a persistent oil glut and revive prices. Brent crude oil, a global benchmark, has rebounded about 20 per cent since Opec decided at the end of November to restrict supplies for six months starting January 1. Brent rose 0.8 per cent to $56.46 a barrel by 11:32am in Dubai. Lukoil is seeking opportunities for growth in the Middle East as Iran opens more of its oilfields to international partners and other countries need technology to develop deposits, Al Jabouri said.

Lukoil is in talks with National Iranian Oil Co, the country’s state producer, about the Ab Teymour and Mansouri oilfields in western Iran, he said.

The company is also interested in pumping oil from offshore fields in Abu Dhabi and producing heavy crude in Oman and Kuwait. Abu Dhabi is preparing to seek partners for the offshore fields by 2018, he said.