In a relief to consumers, fuel prices in the United Arab Emirates (UAE) are anticipated to decline in June 2024 following a month of predominantly lower global oil prices.
The global benchmark, Brent crude, saw a notable decrease in May, trading between $82 to $83 per barrel and averaging $83.35, compared to the previous month’s average of $88.79.
This dip was attributed to abundant crude supply and weakened demand, particularly in the Asian markets.
The Fuel Price Committee of the UAE, a key player in the energy market, is responsible for revising retail petrol rates on a monthly basis.
This is done to align with global crude prices as part of the deregulation policy, ensuring that the interests of consumers and businesses are protected. The new rates are expected to be announced on the last day of May.
Throughout May, petrol prices witnessed a consistent upward trend, marking the fourth consecutive month of hikes.
Geopolitical tensions in the Middle East propelled global rates higher, reaching Dh3.34 per liter for Super 98, Dh3.22 per liter for Special 95, and Dh3.15 per liter for E-Plus, marking the highest prices seen in the past seven months.
Industry experts have been closely monitoring the dynamics influencing oil prices.
Vijay Valecha, Chief Investment Officer at Century Financial, noted that while tensions across the Middle East and OPEC+ production cuts initially bolstered oil prices, abundant supply outside the group and weakened demand in Asia have contributed to a softening since early April.
OPEC+ is anticipated to convene online to discuss extending production curbs into the second half of 2024.
Senior Analyst at Swissquote Bank, Ipek Ozkardeskaya, highlighted various factors contributing to the outlook of oil prices.
The ongoing geopolitical tensions, coupled with rising US demand heading into summer and China’s efforts to support its property market, are expected to buoy oil and commodity prices.
However, Ozkardeskaya cautioned that a potential risk to oil prices surpassing the $80 per barrel mark lies in the uncertainty surrounding the reflation trade.
Should central banks temper their plans for rate cuts during the summer, the demand outlook for oil could be significantly impacted, thereby limiting its recovery.
The anticipated decrease in fuel prices for June is a much-needed relief for consumers and businesses in the UAE, offering a potential respite amidst the ongoing economic challenges.
As global oil markets continue to navigate through geopolitical uncertainties and demand dynamics, stakeholders will remain vigilant for any shifts that may impact fuel prices in the months ahead.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members