UAE fuel prices for November: Will petrol stay above Dh4 per litre?

Brent crude rose above $110 a barrel for a second time on Wednesday, extending the previous session's gains as traders weighed renewed threats to Middle East oil shipments against signs of recovering exports from Gulf producers.

The international benchmark was trading at $110.86, while US West Texas Intermediate (WTI) reached $99.97, with both gaining more than 1%.

For UAE motorists, the latest rally raises the possibility of another upward adjustment when November fuel prices are announced at the end of October. The outlook is particularly sensitive because October already brought increases of nearly 16% across the three petrol grades.

The UAE's market-linked fuel pricing mechanism reflects international energy-market conditions through monthly reviews. That means the broader October price trend, rather than Brent's latest quotation alone, will be important in determining November's rates.

All three petrol grades increased by roughly 16% from September, when Super 98 cost Dh3.80, Special 95 Dh3.69 and E-Plus Dh3.61. Diesel rose from Dh4.30.

The longer-term comparison illustrates the scale of the international energy shock. In February, before the latest Middle East conflict, Super 98 cost Dh2.59, Special 95 Dh2.48 and E-Plus Dh2.40, while diesel stood at Dh2.72.

October's petrol prices are therefore around 70% to 75% above February levels, with diesel approximately 76% higher.

The question now is whether another month of elevated crude prices and unusually expensive oil transportation will add further pressure to November's fuel-price calculation.

Brent has surged nearly 80% so far this year as the Middle East conflict and the Russia-Ukraine war disrupted energy supplies and increased uncertainty over international crude flows.

The benchmark recently touched $110 for the first time since May, reversing an earlier period of easing prices.

Concerns over regional shipping remain central to the rally. Shipping intelligence firm Kpler reported that at least 18 vessels had been attacked over the past two weeks, reinforcing concerns about the reliability of oil movements through the region.

Renewed Houthi attacks and strikes targeting Saudi energy and other facilities have added to those concerns.

At the same time, US oil inventories have tightened. Industry estimates from the American Petroleum Institute indicated further declines in crude and petroleum-product stocks, providing additional support for prices.

Together, these developments have kept Brent elevated despite reports that Gulf oil exports are recovering.

One of the biggest changes in the global oil market is the cost of transporting crude.

According to Goldman Sachs, average oil freight costs have climbed from approximately $3 per barrel last year to more than $20, while rates on some Middle East routes have reached $35 per barrel.

The bank attributed the increase partly to war-risk premiums, higher vessel fuel costs and ship-to-ship transfers in the Gulf of Oman.

These transfers allow crude to be moved between vessels as shipping companies adjust operations around security risks in the Strait of Hormuz. But they also tie up tankers, reducing the number available for other journeys.

Goldman's analysts warned: “Higher freight rates for longer pose some upside risk to our Brent forecast, along with the risks of more intense shipping attacks, damage to oil infrastructure, and a stickier geopolitical risk premium.”

The bank's baseline forecast remains Brent at $90 a barrel by the end of 2026, although the latest shipping disruption creates upside risks to that projection.

For the UAE fuel-price outlook, these costs matter because international refined-product prices, transportation expenses and broader market conditions influence retail fuel pricing. They do not, though, translate directly into an equivalent increase at the pump.

There is an important counterweight to the supply concerns.

The Wall Street Journal reported that total Middle East oil flows reached approximately 24 million barrels per day in the week to October 18, exceeding pre-war levels, citing Kpler data.

The figures suggest that regional producers and shipping companies have made progress in maintaining exports through alternative routes and operating arrangements.

However, estimates of shipments specifically passing through the Strait of Hormuz differ. Reuters separately cited Kpler data indicating flows of around 8.5 million barrels per day, while the Wall Street Journal reported a figure of approximately 14 million barrels per day.

The difference highlights the importance of distinguishing total regional exports from shipments through individual routes and the differing measurement approaches.

DBS analyst Suvro Sarkar told Reuters that oil markets were balancing hopes of a diplomatic breakthrough against continued supply risks and declining US inventories.

“We believe this is a mix of profit taking and optimistic hopes of a Qatar- or Pakistan-brokered deal, countered by the realisation that any deal is still very distant and compounded further by inventory data from the American Petroleum Institute (API), which shows drawdowns continuing in the US for both crude and products,” Sarkar said.

An exact November price cannot be calculated reliably from current Brent prices alone. But motorists can assess how different adjustments would affect their fuel bills.

For a vehicle taking 60 litres of Special 95, a full fill currently costs Dh256.80. A 10-fils increase would add Dh6, while a 20-fils increase would add Dh12. For an 80-litre SUV using the same petrol grade, those increases would add Dh8 and Dh16 respectively.

A driver consuming 240 litres of petrol monthly would spend an additional Dh24 for every 10-fils increase per litre. (These are illustrative calculations, not predictions of the November rates.)

Based on the oil-market developments so far in October, the risk of another UAE fuel-price increase remains elevated. Brent above $110, tightening US inventories and record tanker freight costs all point to continued pressure on international energy prices.

However, recovering Gulf exports and the possibility of diplomatic progress could help contain further increases if these developments lead to sustained moderation in crude and refined-product prices.

The remaining trading sessions in October will therefore be important. If Brent stays around $110 and freight costs remain elevated, the case for higher November pump prices would strengthen.

A sustained decline towards $100 or below would ease some of that pressure, although the full month's international pricing averages would still matter.

For UAE motorists, the current outlook is therefore tilted towards another increase rather than a significant reduction, but the eventual adjustment will depend on international market conditions through the end of October.