UAE consumers in shock as oil hits $90 a barrel

Dubai: Oil yesterday crossed the $90 a barrel mark before retreating, sending shockwaves among global consumers.

US crude dropped by 68 cents to $88.79 a barrel by 7.14 pm, having hit a record high of $90.07 earlier.

"It's surprising, the market has its own mind," Kate Dourian, editor of energy information service provider Platts Middle East, told Gulf News.

"It looks like the demand projections were not in tune to the market reality; 500,000 barrel increase by Opec members have not filtered in to the market yet."

Bad news

The news comes to the UAE consumers at a difficult time when they are faced with additional costs on house rents, school fees, higher prices of essentials - especially those imported from Europe and India.

Added to this is the worry of a strengthening value of the euro and Indian rupee against the dollar-pegged UAE currency.

Despite living in an oil exporting economy, this could be an unwelcome news to the UAE consumers who are already suffering under the weight of imported inflation - a situation which is likely to worsen in the coming months.

It is also unclear if the local gasoline retailers would increase oil price.

"They might put pressure on the government to increase, but they are likely to be careful as a higher fuel price might encourage consumers to switch to alternative fuels or reduce the use of vehicles," Dourian said.