Abu Dhabi: Petrol prices dropped by 6 per cent and diesel by 12 per cent as the Ministry of Energy announced new fuel prices for January.

The price of Special 95 has been fixed at Dh1.58 per litre and diesel at Dh1.61 per litre. Super 98 will cost Dh1.69 per litre and E Plus 91 at Dh1.51 per litre.

Oil prices decreased for a fifth consecutive month in the UAE.

The per litre prices for December are Dh1.79 for Super 98, Dh1.68 for Special 95, Dh1.61 for E Plus-91. The price for diesel was fixed at Dh1.83 per litre.

Commenting on the new fuel prices, Dr Matar Al Neyadi, Head of Fuel Price Committee, told Gulf News that the impact of the reduced fuel prices will be positive.

“The decision has been implemented for the last six months. We are proud on how it is being implemented and the reaction from the market. Definitely the price of goods and services will go down,” he said but did not provide a forecast when asked on how long oil prices will remain low.

In  a landmark decision in July, the Ministry of Energy deregulated fuel prices and new pricing policy linked to global prices adopted.

Global oil prices have plunged by more than 50 per cent in the last one year.

From more than $100 per barrel, oil prices have plunged to less than $40 in recent times as a global glut persists. Brent, the global benchmark, was trading at $37.29 barrel at 01:55 PM UAE time on Monday.

Daniel Ang, an Investment Analyst from Phillip Futures told Gulf News that low prices should continue as long as there is an excess of supply in the market.

“As long as we are still experiencing an excess of supply, low prices should persist,” Ang said.

“We are currently testing the 2008 lows and would think this would hold. I would ultimately think that if the bearishness turned out stronger than expected, prices could reach $30, but to reach lower, would be unexpected,” he said.

The entry of Iranian oil into the market could put further downward pressure on oil prices.

Threat to oil prices

“I would think that this is the main threat to oil prices in 2016. If it really does happen, I would think that a new low would be seen and it would most likely set back any possible price increases by at least a quarter or two,” Ang added.

Iran reached a historic nuclear deal with six world powers in July and is expected to pump in more oil into the market as sanctions are removed.

The Organisation of Petroleum Exporting Countries in its World Oil Outlook report last week said low oil prices will continue for many years with the group predicting a price of $70 per barrel for its basket of crude in 2020.