DUBAI — UAE motorists could see fuel prices rise in August after international crude oil benchmarks spiked above $100 per barrel, threatening to reverse the price cuts implemented at petrol pumps across the country earlier this month.
The potential price surge comes as geopolitical tensions in the Middle East re-ignited supply disruption fears, lifting crude prices after weeks of steady declines.
Crude Rally Threatens July Relief
International benchmark Brent crude surged as much as 7 percent during recent trading sessions to hit $100.78 a barrel. US West Texas Intermediate (WTI) rose 5 percent to $91.78, while Murban crude, the primary benchmark for Abu Dhabi exports, advanced 15 percent to $105.40 a barrel.
The five-day rally marks a sharp reversal from early July conditions, when Brent traded near $73 per barrel amid hopes of easing regional tensions and stable shipping lanes.
The decline in global crude earlier in the month allowed the UAE Fuel Price Committee to lower retail rates for July. Under the current structure, Super 98 stands at Dh3.40 per litre, Special 95 at Dh3.29, E-Plus 91 at Dh3.21, and Diesel at Dh3.60.
Market Drivers and Pricing Mechanism
The latest surge in global oil markets follows reported attacks on maritime energy transport in the Red Sea and Gulf shipping corridors, unsettling energy traders who had previously priced in a prolonged period of market stability.
The Ministry of Energy and Infrastructure sets domestic fuel prices at the end of each month based on the average international prices of crude and refined products during that month, rather than single-day market movements.
Because the domestic pricing model relies on a monthly average, the impact on August retail fuel prices will depend on where crude trades through the remainder of July.
- Sustained High Prices: If Brent remains in the $95 to $100 range through month-end, the higher average will likely force an upward revision in August fuel rates.
- Market Cooling: Should prices retreat toward the $80 to $85 band as geopolitical fears subside, retail prices in the UAE may remain broadly stable or see only minor adjustments.
Energy analysts note that prior market forecasts from institutions including the US Energy Information Administration (EIA), Goldman Sachs, and Morgan Stanley had anticipated Brent averaging between $75 and $80 in the second half of the year, predicated on unimpeded supply flows and scheduled OPEC+ production adjustments. The recent market volatility could force revision of those projections if supply chain disruptions persist.
The UAE Fuel Price Committee is expected to announce the official retail petrol and diesel rates for August on July 31.
