Why Petrol Price is Increasing in UAE?

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Despite the numerous fuel stations in the country, you might sometimes find yourself stranded with a flat battery. There is a reason for that – petrol in UAE is expensive. With each passing day, the price of petrol keeps increasing, often out of our budget range. However, there’s always a silver lining when it comes to things. There are many reasons behind the high fuel cost in UAE, like sanctions imposed by countries on Iran and Qatar. But before diving into all that, let’s understand how we calculate fuel prices in the country. And why does it get expensive? Let’s dive into all that!

Petrol Price in UAE

Petrol price in UAE is based on the international oil market and adjusted every month. For example, in April 2022, petrol prices were E Plus 91: 3.55/litre, Special 95: 3.62/litre, Super 98: 3.74/litre, and Diesel: 4.02/litre.

Currently, the petrol price in the UAE for February 2023 is Special 95: AED 2.93, Super 98: AED 3.05, E-Plus: AED 2.86, and Diesel: AED 3.38. However, in May 2022, petrol prices were slashed by 0.25 per cent, while diesel prices were increased by 0.10 per cent as per the increase in global crude prices.

How Many Petrol Stations in UAE?

The UAE has four major petrol stations: ENOC, EPPCO, Emarat, and ADNOC.

The first of these is ENOC, which was established in 1974. It has more than 300 filling stations in the country and offers a wide range of fuel services. Its facilities include oil changes, car washes, tire pressure checks, convenience stores, and cafes.
EPPCOs are also popular among consumers. It was established in 1975 and had over 100 filling stations nationwide. The company offers a wide range of fuel services as well.
Emarat is another popular filling station that was established in 1985. Today, it has over 100 filling stations across the country. Besides fuel services, EMAARAT offers Salik tags to pay automated toll road charges.
ADNOC Filling Stations is one of the country’s largest companies providing fuel services, with its multiple subsidiaries operating under it. Its filling station network provides various fuel services to its customers nationwide.

Which Petrol is Best in UAE?

It is important to note that the best petrol for your vehicle will vary depending on its make and model. Some better-quality fuel types include E Plus, Super, and Special.
The price of petrol in the UAE has been a matter of debate. However, the prices of diesel, special 95, and super 98 are all higher than E-plus 91. This indicates that diesel prices are the highest compared to other fuel prices.
Like E-plus 91, diesel prices increased by over 15% in April 2022 compared to the previous year. The reason for rising diesel prices is due to deregulations of petrol prices fixed by the Government.
As per government rules, petrol prices were fixed monthly based on international oil prices. But after deregulations, petrol prices were raised or decreased based on market trends and the demand-supply ratio. In turn, this has increased the cost of petrol over the past few years.
The National Fuel Committee (NFC) adjusts fuel prices monthly based on a formula provided by International Oil Prices (IOP). The IOP influences fuel price movements worldwide and is used to adjust the cost of crude oil production and consumption worldwide.

How to Calculate Petrol Price?

There are a few methods that you can use to calculate petrol prices. The most commonly used method is the Brent method, which uses oil prices from the London-based company BP Statistical Review of World Energy. This calculation considers international crude oil prices and fuel costs to create a price index for petrol products in the UAE.

Another way to calculate petrol prices is by using the average fuel costs at different filling stations nationwide. You will need information such as station location, type of product sold (petrol or diesel), and fuel cost per litre.

Why Petrol Price is High in UAE?

The UAE is one of the top countries determining world oil prices, and since 2016, the price of petrol has been monitored and adjusted monthly by the Fuel Committee under the Ministry of Energy. However, since March 2021, the controls on petrol prices have been lifted to reflect the upward trend in global oil prices. This has led to increased fuel prices across both public and private sectors. As a result, fuel prices in the UAE have increased by as much as 60% since 2016.

This increase in fuel prices is a result of OPEC’s decision to continue reducing production despite the high oil demand. This has kept oil prices elevated. Furthermore, with higher fuel prices, governments, such as the UAE, encourage citizens to use alternative fuels such as solar power and electric vehicles.

The increasing crude oil prices globally are one of the primary reasons for the increase in fuel prices.
The UAE Fuel Price Committee adjusts petrol prices monthly based on international oil prices. It has been doing this since 2007, and its decision is based on factors such as the rupee-dollar exchange rate and global oil prices.
Since 2014, the Organization of Petroleum Exporting Countries (OPEC) has pursued a production-cut agreement to balance the world oil market and keep prices elevated. It is estimated that 2018 will be the first year OPEC members will fully implement an output cut agreement.
The Government also deregulated petrol prices to strengthen the economy and attract foreign investments. The subsidized diesel rate of Dh2.90/l in Dubai and northern emirates and Dh2.35/l in Abu Dhabi was announced by the UAE Ministry of Energy in April 2018 following a consultation with stakeholders.
This factor will likely continue due to increasing demand for diesel fuel in both domestic and industrial sectors, coupled with soaring crude oil prices.

When Will Petrol Price Decrease in UAE?

The Fuel Price Committee recently announced a decrease in petrol prices for May 2022. This is following the reduction of excise duty on petrol and diesel. As per the announcement, petrol prices will be cut by E Plus 91: 3.55/litre, Special 95: 3.62/litre, Super 98: 3.74/litre and Diesel: 4.02/litre.
This comes after an increase in fuel prices of 14 percent in April this year. The petrol price increased by 20 paise per litre while the diesel price increased by 10 paise per litre.
Petrol price hike is primarily due to a rise in global crude oil prices, which has also affected petroleum products. However, it still needs to be lowered compared to a 2-3 percent global inflation rate.

Conclusion

Petrol prices in the UAE are rising and might not be too far off from a decrease. This rise has been attributed to increased demand, the opening of new petrol stations, and limited supply. However, factors such as a decrease in the fuel efficiency of vehicles and a rise in fuel prices are also at play.

FAQ – Why Petrol Price is Increasing in UAE?

Will fuel prices ever go down?

This question has yet to be answered, as fuel prices can change anytime. However, prices will likely decrease in the future, especially once the production cut agreement by OPEC members is fully implemented.

Since fuel prices are deregulated in the UAE, they are now linked to global prices. As a result, petrol prices in the UAE will always be higher than if the fuel price was regulated by the Fuel Price Committee (FPC). Since Brent crude oil has been mostly hovering above $80 per barrel, petrol prices in the UAE are expected to remain around $1.01/Liter in 2024 and $1.09/ Liter in 2025.

Who decides fuel prices in UAE?

The fuel prices in the UAE are decided by the Fuel Price Committee (FPC), which the Government established to monitor oil, gasoline, and diesel prices. The committee comprises representatives from the Ministry of Energy and fuel companies. The FPC announces monthly changes to fuel prices on the 28th of every month. Complaints can be made to the Ministry of Energy & Infrastructure in case of violations.

Where does UAE get its petrol from?

The UAE gets its petrol from various sources, but it mainly depends on the global petroleum price benchmark to determine fuel prices. Petroleum prices are then adjusted and set by the Fuel Price Committee based on global market conditions.

For example, in October 2015, the UAE withdrew fuel subsidies and introduced a Value Added Tax (VAT) of 5% on petrol and diesel. This raised the cost of petrol in the UAE relative to other countries where petrol is subsidized.

The committee also announces the petrol and diesel prices for the following month on the 28th of each month [101, 102, 104]. So, you can be sure that the petrol price in the UAE is always accurate and reflects global market conditions.

How can we save petrol in UAE?

Here are a few ways to save petrol in the UAE:

Reduce your vehicle’s fuel consumption by driving at a steady speed. This will help you save on gas and the wear and tear that high-speed driving puts on your car.
Invest in public transport like the metro and bus systems. Not only will you be reducing your carbon footprint, but you’ll also be saving money on petrol costs.
Visit petrol stations that offer additional services such as oil changes and car washes. This way, you’re not just buying petrol, but also getting service and convenience at the same time.
Monitor petrol prices in the UAE to stay informed on the latest changes. When petrol prices rise, it pays to switch to alternative transportation options like bicycles or electric scooters.
Consider alternative transportation such as bicycles or electric scooters instead of petrol-fueled cars. Not only do these options have a minor environmental impact, but they’re also affordable and convenient alternatives for travelling around the city.

What controls the petrol price?

The UAE Fuel Price Committee sets the petrol prices in the UAE, typically following movements in the global oil market. The price of petrol is influenced by several factors, including the cost of oil, a margin to cover the costs and expenses of the retailer, and a tax of 5% from 2018 onwards.

As of 1 August 2015, fuel prices were deregulated and linked to global prices. This means that consumers will no longer be subject to subsidies on fuel to encourage its use. Instead, fuel prices will be set based on international prices, and the retailer will retain margins. This is intended to promote petroleum consumption through price-elastic demand and make it more economically viable for retailers to sell fuel.

Will petrol vanish after 5 years?

The Fuel Price Committee in the UAE has frozen petrol prices in 2020 due to the COVID-19 pandemic. This has caused the prices of petrol and diesel in the UAE to remain relatively stable over the next five years.

The Organisation of Petroleum Exporting Countries (OPEC) continues to limit oil production, leading to higher prices for crude oil. As a result, petrol prices in the UAE will likely remain relatively stable over the next five years. At this point, it’s uncertain what the future holds for the petrol industry, but it is likely to remain a key part of the global economy for at least the next five years.