Dubai: The Abu Dhabi National Oil Company (Adnoc) said on Thursday the price of diesel would increase by Dh0.25 to Dh2.35 per litre from Saturday — an increase of 11.9 per cent.
Industry sources said this could result in higher prices for essential commodities across the board as transporters raised charges.
State news agency WAM quoted Adnoc as saying the price increase was due to the losses it had sustained from selling diesel at uneconomical rates in spite of the higher production cost.
Tom Nauwelaerts, Head of Logistics at Al Futtaim Group, told Gulf News the almost 12 per cent increase "will not be received with a broad smile".
"It's not a small increase. It's actually quite a lot," he said, especially when most commercial transport runs on diesel.
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"I don't know what the driver behind it is."
Al Futtaim had already looked into ways of cutting fuel costs, he said.
The company had recently adopted a programme to help reduce fuel consumption by 35 per cent.
Measures included making sure drivers did not exceed a certain speed limit.
Nauwelaerts said that news about the increase would now force them look into other ways to cut costs.
"We will not pass this fully on to the consumer, but if it continues to go like this it will ultimately have to be passed on because companies can't bear the costs alone," Nauwelaerts said.
Kareem Murad, lead analyst for logistics and transportation at Shuaa Capital, told Gulf News the diesel price increase would have an impact on companies' profitability and margins.
He agreed that "in the long term, part of this additional cost will likely be passed on to consumers".
Murad said although the price had increased by 12 per cent, "it is still considered much more favourable in the region than anywhere else in the world".
"The companies will bear the cost of the increase," Murad said. "The consumer will bear the cost of the increase. Everybody will — we will all pay the additional cost."
- 35% fuel consumption to be cut by Al Futtaim
- Dh2.10 is the current price of Adnoc diesel
- Dh2.35 will be the new price of Adnoc diesel from Saturday
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