UAE Residents May Benefit from Sustained Low Petrol Prices as Global Oil Market Trends Shift

UAE Residents May Benefit from Sustained Low Petrol Prices as Global Oil Market Trends Shift

Dubai, UAE — Residents in the UAE could continue to enjoy lower petrol and diesel prices as the global oil market shows signs of sustained lower crude prices for the coming year. This trend is being driven by a projected oversupply in 2025, along with cautious optimism that regional conflicts will not severely disrupt oil production, according to industry experts.

The combination of expected demand downgrades by OPEC and the International Energy Agency (IEA), and hopes that Iranian oil installations will remain unaffected by regional tensions, has set the stage for a potential decline in oil prices through 2024 and into 2025.

Petrol prices in the UAE have already seen a significant drop, bringing much-needed relief to consumers. In July 2022, petrol prices in the country reached a historic high, with Super 98 costing Dh4.63 per litre. As of October 2024, the price had fallen to Dh2.66 per litre. This sharp decline reflects global crude oil prices, which have fallen from a peak of $123.70 per barrel in 2022 to around $80 per barrel today.

Energy market analysts suggest that while output cuts by OPEC+ have helped support prices, a potential supply glut could lead to further price reductions. Slower demand from China and ongoing geopolitical risks in the Middle East are also contributing to a bearish market outlook. Additionally, analysts warn that if a stronger U.S. dollar emerges, especially under a potential Trump presidency, oil prices could face additional downward pressure.

However, some experts caution that oil prices could surge if Iran’s oil supply is disrupted due to escalating tensions in the Middle East. While there are concerns that attacks on oil infrastructure or the closure of the Strait of Hormuz could trigger a spike in prices, these scenarios are currently considered unlikely.

Despite the ongoing conflicts in the Middle East, oil prices have remained relatively stable. Industry experts attribute this stability to several factors. First, the market is well-supplied, with OPEC+ holding over five million barrels per day of spare capacity. Second, advances in technology, such as satellite surveillance and tanker tracking, have provided more accurate real-time data, reducing market overreactions to potential supply disruptions.

Lastly, the geopolitical landscape in the Gulf has shifted. The 2023 China-brokered agreement between Iran and Saudi Arabia has eased tensions in the region, reducing fears of significant supply disruptions, including the closure of the vital Strait of Hormuz, through which about 30% of the world’s seaborne oil passes.

In the short term, the oil market remains bearish, with weak demand from China and a looming surplus keeping prices under pressure. While OPEC+ production cuts may offer temporary support, the overall outlook suggests that prices will remain low unless a significant supply disruption occurs.