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Tuesday, July 28, 2026

UAE fuel prices: Second rate drop expected in August, but cut may be limited

By Vijay Valecha in 'Century in News'

UAE fuel prices: Second rate drop expected in...

Vijay Valecha, Tue, July 28, 2026 Khaleej Times

Lower crude oil prices point to another reduction in UAE fuel rates for August, but analysts warn geopolitical risks and tight inventories could limit the size of any cut

UAE motorists could see fuel prices decline for a second consecutive month in August, although the reduction is likely to be much smaller than recent swings in global crude oil markets would suggest.

The outlook comes after Brent crude averaged around $87 per barrel in July, compared with $85 per barrel in June, while prices have remained volatile amid recurring tensions involving Iran, disruptions to regional shipping routes, and uncertainty over the Strait of Hormuz.

According to Vijay Valecha, Chief Investment Officer at Century Financial, lower crude prices should feed into UAE retail fuel rates, but not fully or immediately. “Some of this month’s crude relief should carry through to next month’s petrol prices, but low product inventories and the market’s inherent stickiness mean the decline at the pump will likely be smaller and slower than the crude price swings imply, with the risk skewed toward renewed spikes rather than a smooth glide lower."

Valecha added that if July crude prices settle around $79 per barrel versus about $82 in June, “the arithmetic points to a second consecutive cut at the pump,” with Special 95 potentially reaching around Dh3.13 per litre and Super 98 about Dh3.24 per litre.

In July, prices fell after the US and Iran declared a ceasefire. Last month, Super 98 was priced at Dh3.40 per litre, with Special 95 at 3.29 and E-Plus at Dh3.21. Diesel is priced at 3.60.

For UAE consumers, that means August fuel prices are likely to remain sensitive to developments in the Gulf. While lower crude prices and expectations of easing fuel costs support the case for another reduction at the pump, analysts say inventories remain tight and geopolitical tensions continue to embed a risk premium in oil markets.

As a result, motorists may benefit from another decline in petrol prices when the UAE announces August rates this week, but expectations of a sharp drop could prove unrealistic unless crude prices continue to retreat and regional tensions ease further.

Source

Khaleej Times

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