Abu Dhabi: Fuel prices are going up in May, the Ministry of Energy announced on Sunday with petrol to be costlier by six fils and diesel by two fils.
The new per litre fuel prices for May are: Super 98-Dh2.01, up from Dh1.95 in April; Special 95-Dh1.90, up from Dh1.84; E Plus-91-Dh1.83, up from Dh1.77. And diesel price has been increased to Dh1.97 per litre from Dh1.95 in April. The new prices will come into effect from Monday.
Fuel prices have gone up as global oil prices recover due to an agreement between Opec (Organisation of the Petroleum Exporting Countries) and non-Opec members to reduce their output by about 1.8 million barrels per day from January 1 for a period of six months.
The deal is likely to be extended beyond June as global oil inventories continue to remain high, Saudi Arabia’s energy minister Khalid Al Falih told reporters in Abu Dhabi last week.
The global benchmark Brent crude is trading at $52.05 per barrel and the US crude West Texas Intermediate at $49.33 per barrel on Sunday at around 3:25pm UAE time.
Analysts expect oil markets moving towards balance but the process will take longer than expected due to increased production from the US and weak demand.
“Anything but an agreement to extend the deal on May 25 could have a serious negative impact on prices. Abu Dhabi Investment Authority (Adia) last week highlighted the risk of oil slumping to $40 per barrel on a failure to extend and such a scenario cannot be ruled out,” Ole Hansen, head of commodity strategy at Saxo Bank told Gulf News.
He said deal extension of some sort is already being priced in but the concern in the market remains how effective an extension can and will be.
Cutting production during H1 (first half of the year) which is the low demand season is much easier than second half, he added.
“Iraq supports an extension but asking to be exempted can create some tensions within the group. Russia, an important participant in the current deal have so far adopted a wait-and-see approach which we at this stage interpret as no but renewed price weakness will not be welcomed by Russia and that could sway them to agree to an extension.”
The fuel prices are calculated on the average global prices for diesel and petrol with the addition of operating costs and profit margins of the distributing companies in the UAE.
This year fuel prices have gone up in January, February, March and May while prices fell in April.
