Iran-US conflict: Gulf oil soar above world, US prices — UAE fuel to get costlier?

Dubai: Oil prices across the Gulf have jumped sharply, rising above global and US oil prices as concerns grow over shipping routes in the region amid escalating tensions with Iran.

The increase has pushed Murban crude oil, the UAE’s main export crude, to some of the highest levels in the market. Murban is the main UAE export grade and an important regional pricing reference, meaning its price often reflects what is happening across Gulf oil markets.

During trading on March 5–6, several Gulf crude grades rose quickly as supply fears intensified. Murban led the surge, reaching a Government Selling Price of $112.55 per barrel. Other UAE crude grades also climbed:

The price increase was also seen across the wider Gulf region. Outside the UAE:

Traders say these moves show a common “Hormuz risk premium” now being added to oil produced inside the Gulf.

Much of the increase is linked to worries about shipping through the Strait of Hormuz. About 20 million barrels of oil per day pass through this narrow waterway — close to 20% of global oil flows.

When there is uncertainty around the route, oil traders often add a risk premium to prices. Even though Murban is trading the highest because of its quality and location, analysts say the premium is now affecting nearly every barrel of oil produced behind the strait.

Concerns intensified after comments from Qatar’s Energy Minister Saad al-Kaabi. “Gulf exporters would halt production within days if tankers are unable to pass through the Strait of Hormuz,” he said.

The warning triggered heavy buying by Asian refiners, particularly in countries such as Japan and South Korea, which rely heavily on Middle Eastern crude grades.

Several indicators show how tight the Gulf oil market has become. One key signal is the Dubai cash premium, which refiners pay above the official crude price to secure physical barrels.

On March 5, the premium jumped to $19.63 per barrel, the highest level since records began in 2018. Analysts at Energy Aspects say the market is reacting to fears that crude shipments could become trapped inside the Gulf.

They described a situation where physical oil cargoes are effectively “stranded,” with buyers paying large premiums for barrels already outside the region or guaranteed to be delivered.

The price surge in the Gulf has widened the gap with US oil prices.

While Murban and several Gulf grades have moved above $100 and even $110 per barrel, West Texas Intermediate (WTI) has remained much lower. WTI has been trading around $76–$79 per barrel.

The gap suggests the current surge reflects regional supply risks rather than a global shortage of oil.

Despite the jump in Gulf oil prices, petrol and diesel prices at UAE stations have not yet reflected the latest surge. Fuel prices in the UAE are reviewed once every month.

March 2026 fuel prices were set right before the latest oil surge, with Super 98 at Dh2.59, Special 95 at Dh2.48 and diesel at Dh2.72 per litre. The March adjustment increased prices 14–20 fils compared with February.

Motorists have also seen two straight months of price cuts since December, after oil prices eased earlier. Authorities monitor global energy markets closely and aim to keep fuel prices balanced for motorists while reflecting international trends.

UAE petrol and diesel prices are reviewed every month and are based on average global oil prices and refined fuel costs from the previous period.

This system means pump prices generally move with global energy markets, rising when oil prices increase and easing when oil prices fall.

Movements in Murban alone do not determine UAE petrol prices, though large shifts in Gulf oil markets can signal wider pressure building in global energy markets.

Fuel prices in the UAE climbed steadily through mid-2025. They peaked around October, then eased toward December. Prices fell sharply in January, bringing relief to motorists at the start of 2026.

Over the past year, drivers in the UAE have seen several increases and decreases, showing how quickly global oil markets can affect pump prices. If Gulf oil prices stay high through March, the next monthly fuel review could reflect those higher costs.

Oil prices can change quickly. Retail fuel prices usually move more slowly because they follow the monthly pricing cycle. This outlook uses current market prices and reported developments.

UAE petrol and diesel prices are set by the UAE Fuel Price Committee, and final pump prices can differ if global oil markets change before the official announcement.