Fuel costs among lowest in the world

UAE prices will now be pegged to global rises and falls

ABU DHABI // The UAE has some of the most affordable petrol prices in the world.

The Ministry of Energy’s decision to raise prices follows a report by Carmudi – an online vehicle marketplace – which concluded fuel prices in the Middles East were “incredibly low” compared with prices in other countries. In the UAE, the world’s eighth-largest oil producer, the average price per litre of petrol in April, May and June was US$0.47, or about Dh1.72, which is less than a third of the cost in western Europe.

However, the cost of fuel in the emirates is three times more than in other GCC countries, the study found. Carmudi said the price was $0.15 (55 fils) per litre in Saudi Arabia, which is Opec’s largest oil producer, and $0.26 ( 95 fils) in Qatar, the world’s third-largest oil producer.

The price of premium unleaded petrol in the United States is $3.18 (Dh11.68) a gallon, or 84 cents (Dh3.09) a litre, according to the American Automobile Association’s daily fuel gauge report.

Dr Matar Al Nyadi, undersecretary of the Ministry of Energy and chairman of the Gasoline and Diesel Prices Committee, said that petrol prices might rise slightly at first, while diesel would fall.

With the government decision, fuel costs will now reflect price changes in the global market without any ministerial intervention.

Endorsing an increase in fuel prices could boost UAE state finances, which have been weakened by plunging oil export revenues since last year, because of the decline in global crude prices.

The International Monetary Fund projects the UAE will post its first fiscal deficit since 2009 this year. It estimates the country spends as much as $29 billion (Dh106.5 bn) a year on supporting energy prices.

The global price of Brent oil is around $ 56 per barrel, not far from six-year lows.

But linking UAE prices to global levels could clear the way for substantial rises in the future, if Brent starts to recover.