{"id":612897,"date":"2026-05-31T00:53:12","date_gmt":"2026-05-31T00:53:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/612897\/"},"modified":"2026-05-31T00:53:12","modified_gmt":"2026-05-31T00:53:12","slug":"why-a-uae-petrol-price-reduction-in-june-does-not-mean-we-are-on-the-same-road-as-2022","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/612897\/","title":{"rendered":"Why a UAE petrol price reduction in June does not mean we are on the same road as 2022"},"content":{"rendered":"

A sharp decline in global oil prices<\/a> in May bodes well for UAE motorists, as pump costs are expected to decrease. <\/p>\n

But compared to the rapid reductions that followed a surge in the early days of the Russia-Ukraine war in early 2022, a return to pre-Iran war<\/a> levels may take longer this time, analysts say.<\/p>\n

In March 2022, more than a month after Moscow launched attacks on Kyiv, Brent soared to nearly $140 a barrel, while West Texas Intermediate topped $133.<\/p>\n

That caused UAE pump prices to leap by as much as 60 per cent. Prices peaked about two months later, in July, before easing back to pre-war levels by January 2023.<\/p>\n

UAE authorities are expected to announce June petrol prices on Sunday. <\/p>\n

Fuel prices, except for diesel, increased for a third consecutive month at the start of May<\/a>, after officials reduced them in January<\/a> and February<\/a>. <\/p>\n

Between March and May, Super 98, Special 95 and E-Plus 91 all rose more than 40 per cent, while diesel surged 72 per cent.<\/p>\n

The effects of the Russia-Ukraine war<\/a> on oil markets were fundamentally different in several ways, as it was based largely on market adaptation, analysts say. <\/p>\n

At that time, as pump prices eventually fell as crude prices eased, strategic petroleum reserve releases helped, demand softened and refineries adjusted.<\/p>\n

\"\"<\/p>\n

Oman assures US it has no plans for Hormuz toll, says Bessent<\/p>\n

Irina Tsukerman, a geopolitical analyst based in New York, said the Iran-related surge, on the other hand, is more about the risk of physical disruption to one of the world’s most important energy corridors, the Strait of Hormuz.<\/p>\n

“That year [2022] was mostly a sanctions, rerouting and panic-pricing shock around Russia, as Russian barrels did not fully disappear,” she told The National.<\/p>\n

“They were redirected to India, China, shadow fleets, discounted crude channels and alternative buyers. That meant prices could cool once markets learnt the barrels were still moving.”<\/p>\n

Today, the path to lower pump prices depends less on diplomacy alone and more on whether shipping lanes, ports, insurance markets and loading schedules normalise, Ms Tsukerman said. <\/p>\n

“This Iran situation is more directly about physical chokepoint risk. If Hormuz, UAE terminals, tankers, insurance, or Gulf loadings are impaired, barrels are not merely changing destination. They may be delayed, stranded, or removed from near-term supply. That creates a larger risk premium in crude and shipping markets,” she said.<\/p>\n

“The key variable is confidence that Gulf exports can move without disruption. Pump prices lag crude; even if Brent falls quickly, retail [petrol] usually declines more slowly because stations sell through higher-cost inventory, refiners protect margins, and seasonal demand keeps pressure on [petrol] prices.”<\/p>\n

Present-day drama<\/p>\n

At their peak during the US-Iran war, which began on February 28, Brent and WTI shot up by about 70 per cent.<\/p>\n

Since those highs, however, they have markedly declined. On May 29, Brent and WTI settled at $91.12 and $87.36<\/a> respectively, retreating by more than a quarter. Over the month, both fell by about 15 per cent.<\/p>\n

Market sentiment is, notably, being driven by the continuing but largely uncertain peace negotiations between Washington and Tehran. Oil prices have fluctuated depending on signs of progress in the talks. The two sides this week accused each other of breaching the truce, amid renewed strikes.<\/p>\n

US President Donald Trump held a meeting in the White House’s Situation Room on Friday to make a \u201cfinal determination<\/a>\u201d on a proposed agreement with Iran. However, the meeting ended without a decision, reports said.<\/p>\n

“The market’s a bit still all over the place … [but] we’d see an immediate kind of slight drop with the negotiations,” Robin Mills, chief executive of Dubai-based Qamar Energy, told The National.<\/p>\n

He notes that the Strait of Hormuz, a vital waterway through which about a fifth of the world’s energy exports were shipped before the war, remains effectively shut, further complicating the outlook for oil markets.<\/p>\n

Dr Sultan Al Jaber<\/a>, the UAE’s Minister of Industry and Advanced Technology, has said that oil flows through the strait may not fully resume until 2027.<\/p>\n

Mr Mills said if there’s if there is a definitive peace agreement, “then we would see prices drop a bit in anticipation”.<\/p>\n

“But it will take several months after that to see a major drop because there’s so much disruption,” he added.<\/p>\n

“Refineries need to start up again, and tanks need to get moving in and out of the Gulf, and so on. So even after a peace deal, there’s still a lot of work to do to get things back to normal.”<\/p>\n

Declining oil prices have “unquestionably improved” the outlook for UAE motorists, in the lead-up to the June fuel price announcement, but the reality facing energy markets involves a far broader collection of variables than crude oil alone, Ms Tsukerman said.<\/p>\n

As energy sector players spent the past several weeks responding to a resumption or even escalation of the three-month-old conflict, they adjusted procurement, increased inventories, secured additional shipping capacity, purchased insurance protection and incorporated risk premiums into contracts, she added.<\/p>\n

“Many of those decisions continue to influence costs today even though crude prices have moved lower, which explains why declines in international benchmarks do not always translate into immediate or proportional reductions at the pump,” she said.<\/p>\n

$90 oil to linger<\/p>\n

Analysts at Swiss bank UBS, meanwhile, forecast the price of Brent at $90 in the next nine to 12 months. On a global level, the market’s focus remains on a potential deal between the US and Iran, which is pricing in any positive news, said Giovanni Staunovo, a strategist at Zurich-based UBS.<\/p>\n

“The production recovery process will take a long time, and inventories will keep falling even if the strait reopens tomorrow, which should set a floor to prices,” he told The National.<\/p>\n

“Some of the tankers currently stuck in the Gulf could provide a temporary relief if they could exit the strait, but that should only weigh temporarily on prices.”<\/p>\n

\"\"<\/p>\n

Gulf oil flows may not recover until mid-2027, says Sultan Al Jaber<\/p>\n

The rate of decline in oil prices would also depend heavily on how markets interpret the nature of the peace itself, especially if any agreement is comprehensive enough to resolve the underlying drivers of the conflict, restore confidence in regional stability and secures critical transportation routes that would encourage a rapid reassessment of risk, Ms Tsukerman added.<\/p>\n

“For UAE motorists, the monthly pricing mechanism creates a natural timetable for those changes to appear. The first meaningful reductions could emerge during the next pricing cycle after lower oil prices become established and confidence begins returning to energy markets,” she said.<\/p>\n

“Additional decreases could follow during subsequent months as lower-cost inventories move through the system and transportation, insurance and logistics costs continue normalising … markets place tremendous emphasis on durability and predictability when evaluating geopolitical developments.”<\/p>\n","protected":false},"excerpt":{"rendered":"A sharp decline in global oil prices in May bodes well for UAE motorists, as pump costs are…\n","protected":false},"author":2,"featured_media":612898,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,10671,1294,1344,2987,5438,5141,10039,56,54,55],"class_list":["post-612897","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-business-team","tag-economy","tag-energy","tag-oil","tag-standard","tag-story","tag-uae","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/612897","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=612897"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/612897\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/612898"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=612897"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=612897"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=612897"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}