UAE petrol prices defy expectations with surprise drop in November

In November, petrol prices in the UAE will see a decrease for the first time in four months, defying market expectations. This follows a sharp rise in global oil markets during October due to heightened tensions in the Middle East. Super 98 petrol will decrease to Dh4.16 per litre, a 5.5 per cent reduction, while Special 95 will fall by 5.6 per cent to Dh4.04 per litre.

E-Plus 91 will decrease by 5.7 per cent to Dh3.97 per litre, and diesel will drop by 1 per cent to Dh4.75 per litre. Despite this reduction, fuel prices are still 80 per cent higher compared to February, prior to the Iran war. The cost of fuel in the UAE has been influenced by global oil markets since 2015, when deregulation was introduced.

Typically, petrol prices have followed global oil price movements, but this is not always the case. Various factors affect monthly fuel costs, and although the mechanisms for setting these prices differ by country, governments can also regulate high prices. In October, crude prices hit six-month highs and posted a fourth consecutive monthly increase.

Brent, the benchmark for two-thirds of the world's crude, rose 2.4 per cent to $117.64 a barrel, while the more active January futures contract added 2.37 per cent to $113.43 per barrel. West Texas Intermediate, tracking US crude, gained 2.08 per cent to settle at $104.12 a barrel. During the week, both Brent and WTI increased by approximately 0.8 per cent.

Analysts had previously predicted that UAE pump prices would rise again in November, citing concerns over vessel attacks in the Strait of Hormuz, Houthi attacks on Saudi Arabia, and the potential for renewed US hostilities on Iran. These geopolitical risks, along with higher freight costs, suggest an outlook for higher oil prices.

However, persistent supply, weaker demand, and the possibility of a diplomatic breakthrough could limit further increases.