UAE fuel prices for September: Will petrol ease as oil costs fall?

Dubai: UAE motorists could see fuel prices stabilise or edge lower in September if the latest decline in global oil prices continues through the final days of August.

Brent crude fell as much as 2.7% to $88 a barrel on Tuesday, putting the international benchmark on course for a second consecutive decline after an unusually strong run of 13 gains in 14 sessions.

The pullback is significant for the UAE's September fuel price outlook because retail petrol and diesel prices are reviewed monthly based on international oil and refined product prices. Sustained declines in crude during August would therefore improve the prospects for lower pump prices in the next monthly revision.

Yet the outlook remains finely balanced. Brent's latest decline came even as tensions between the United States and Iran increased following new US sanctions targeting Iran's economy, highlighting how oil prices are being pulled in different directions by supply concerns, diplomacy and geopolitical developments.

The UAE Fuel Price Committee's August prices continue to reflect higher global oil prices, with Super 98 at Dh3.60, Special 95 at Dh3.49, E-Plus 91 at Dh3.41 and diesel at Dh3.80, compared with Dh2.45, Dh2.33, Dh2.27 and Dh2.72 respectively in February. (Check latest prices here.)

The recent easing in crude therefore provides a more favourable backdrop for the September review, but the size of any reduction will depend on the average international prices recorded across August rather than Brent's level on any single day.

Brent at $88.10 is around 14% below $102, the upper end of the extraordinarily wide trading range recorded last month. It is also about 22% above $72, the bottom of that range, illustrating why predicting the next UAE fuel price revision remains difficult.

The more important development for September is the change in momentum. After rising in 13 of 14 sessions, crude has now recorded consecutive declines and fallen below $90.

If Brent remains around the mid-to-high $80s through the remainder of August, the probability of another significant rise in UAE fuel prices would diminish. Stable or moderately lower prices would become the more likely outcome.

Brent traded between $72 and $102 a barrel last month — a swing of $30, or roughly 42% measured from the month's low — as expectations repeatedly changed over whether the United States and Iran could reach an agreement that would allow oil tankers to move more freely out of the Arabian Gulf. That remains the central uncertainty.

Tuesday's decline came despite the Trump administration announcing further sanctions against Iran, suggesting traders are weighing geopolitical risks against expectations for global supply and demand.

The market has also received additional supply support from OPEC+. Saudi Arabia, Russia and five other members previously agreed to increase production by 188,000 barrels per day from September.

That extra supply could put downward pressure on international prices if it reaches the market while demand remains stable.

Based on current oil-market trends, stable to moderately lower UAE fuel prices currently appear more likely than another sharp increase, although there is not yet enough information to reliably forecast an exact price per litre.

If Brent remains around $85-$90: September petrol prices could remain broadly stable or ease modestly as the lower crude levels feed into the monthly calculation.

If Brent falls towards $80-$85: the case for a more noticeable September fuel price reduction would strengthen, particularly if the decline is sustained through month-end.

If Brent rebounds above $95: renewed supply concerns or geopolitical escalation could lift the August oil average and reduce the scope for lower September pump prices.

The UAE's market-linked fuel pricing mechanism, introduced in 2015, means retail prices reflect broader international market conditions rather than individual daily movements.

This is particularly important in the current environment. Brent's $72-$102 range last month shows that using either the lowest or highest daily crude price to predict UAE pump prices can give a misleading picture. The monthly trend matters considerably more.

The same principle applies to Tuesday's fall to $88.10. If crude rebounds sharply before the end of August, the effect on September pricing could be limited. If prices remain below $90 or decline further, the case for lower September fuel prices becomes stronger.

The latest oil-market trend has improved the September fuel price outlook, with Brent falling below $90 after an extended rally and additional OPEC+ production scheduled to enter the market from September.

For UAE motorists, current conditions point towards stable or potentially moderately lower fuel prices next month, provided the latest decline in international oil prices is sustained.

The biggest variable remains geopolitical developments surrounding Iran and regional energy flows. Brent's movement between $72 and $102 within a single month shows how quickly that outlook can change.

The UAE's monthly market-linked pricing mechanism will continue to reflect those international developments, with the September revision ultimately determined by the broader movement in global crude and refined fuel prices across August.