Arabian Business - UAE residents tackle rising petrol prices as oil prices continue meteoric rise

Petrol prices in the UAE have continued to increase since February as commodity markets remain tight amid global uncertainty and macroeconomic headwinds. Here is how current petrol prices are effecting the country

Following the increase in July petrol prices, the UAE is subsidising part of petrol prices for low-income citizens, as it introduces an “inflation allowance” amid rising costs of basic goods and services in the country.

The new allowance will provide a monthly subsidy of 85 percent of the fuel price increase over AED 2.1 per litre, state news agency WAM has reported.

The move is part of the UAE president’s directive to restructure its social welfare programme for low-income Emiratis, effectively doubling its size to AED 28 billion.

Learn more about the recent upward trend in petrol prices and the latest inflation allowance for citizens:

Petrol prices for low-income citizens to be subsidised in the UAE amid rising fuel costs

According to the new fuel subsidy scheme, the head of a family will receive a monthly subsidy of 300 litres, while working wives will receive a subsidy of 200 litres.

Petrol and fuel prices in the UAE have increased over the last few months, jumping by over 74 percent since the start of the year. In January, rates were at AED 2.65 per litre for Super 98 petrol. In July, it costs AED 4.63 per litre.

The inflation allowance will also provide food, electricity, and water subsidies, the report showed.

The government will bear 75 percent of food price inflation for eligible Emirati families, and will provide a monthly subsidy of 50 percent for specific electricity and water consumption quotas.

The reformed social welfare programme now has a provision of AED 5 billion for annual social support allocation, compared to the previous AED 2.7 billion, according to the new directive.

Other types of allowances will be introduced as well – including housing (up to AED 2,500) and university (up to AED 3,200) stipends, as well as allowances to unemployed citizens – both job seekers (up to AED 5,000 for six months) and those over the age of 45 (up to AED 5,000).

In the previous programme, there were three allowances allocated to Emirati families – for the head of the family, the wife, and the children. The reform is set to increase these allowances, where a family member could get up to AED 13,000 per month.

UAE launches subsidy scheme for fishermen amid rising petrol prices

UAE’s fishermen are the next beneficiaries of fuel subsidies in the country, as the government launches initiatives to help citizens amid a high inflationary environment.

The Ministry of Climate Change and the Environment partnered with the Abu Dhabi National Oil Company and Emirates National Oil Company to launch the scheme, state news agency WAM has reported.

Emirati minister Mariam bint Mohammed Almheiri met with heads of fishermen’s associations to discuss the challenges in the fisheries sector, which is vital in the UAE’s food security concerns.

The current surge in fuel prices was one of the identified challenges in the UAE fisheries sector, and the scheme is aimed to help the industry.

The ministry has created a point system to determine eligible candidates to the scheme.

“Fishermen are allocated points based on their gross income, if and when they received any marine engine subsidies, the year they enlisted their boats in the Ministry’s public register, the frequency of practicing fishing, and the number of family members registered in their family books,” according to WAM.

The scheme is expected to benefit nearly 500 fishermen this year.

This follows the UAE government’s earlier reforms on its social welfare program, which will see low-income Emirati families receiving subsidies for fuel, food, electricity, and water.

The government called it “inflation allowances,” and said they are also giving stipends for education and unemployment.

Could price of oil really hit a “stratospheric” $380 a barrel?

Global oil prices could reach a “stratospheric” $380 a barrel according to analysts at JPMorgan Chase, reported news agency Bloomberg.

The price of oil could rocket if US and European penalties prompt Russia to inflict retaliatory crude oil output cuts, JPMorgan Chase analysts warned.

Rising oil prices are proving a concern across the world, with motorists feeling the pinch as petrol prices continue to increase.

A 3 million-barrel cut to daily supplies would push benchmark London crude prices to $190, while the worst-case scenario of 5 million could mean $380 crude, the analysts wrote.

The price of a barrel of Brent crude currently stands at $111.6.

Bloomberg reported that the Group of Seven nations are hammering out a mechanism to cap the price fetched by Russian oil in a bid to tighten the screws on Vladimir Putin’s war machine in Ukraine.

However, given Moscow’s robust fiscal position, it can afford to slash daily crude production by 5 million barrels without excessively damaging the economy, JPMorgan analysts wrote in a note to clients.

“The most obvious and likely risk with a price cap is that Russia might choose not to participate and instead retaliate by reducing exports,” JPMorgan Chase analysts wrote.

“It is likely that the government could retaliate by cutting output as a way to inflict pain on the West. The tightness of the global oil market is on Russia’s side.”

Petrol prices in the UAE increased again in July – following months of significant increase since March of this year.

US petrol price has reached $5 a gallon in a historic first as fuel costs continue to surge

The price of US petrol has reached $5 a gallon (AED18.4) in a historic first as fuel costs continue to surge.

Data from the American Automobile Association (AAA) showed the national average price for regular unleaded petrol rose to $5 a gallon on June 11, up from $4.986 a day earlier, according to news agency Reuters.

US President Joe Biden has taken measures to try to lower prices, including a record release of barrels from US strategic reserves and waivers on rules for producing summer petrol.

The US has also spoken to major OPEC countries about boosting output. However, fuel prices have been surging around the world due to a combination of rebounding demand, sanctions on oil producer Russia after its attack on Ukraine and a squeeze on refining capacity.

Economists expect demand may start to decline if prices remain above $5 a barrel for a sustained period, reported Reuters.

The US petrol average is still around 8 percent below its June 2008 highs of $5.41 a gallon, according to US Energy Department figures. However, this price has been adjusted for inflation and never physically reached that level.

As of Thursday, the price of the OPEC basket of 13 crudes stood at $123.21 a barrel, according to OPEC Secretariat calculations.

Petrol prices in the UAE have progressively risen from February this year, while global oil prices have stayed above $100 a barrel for most of 2022.

Earlier this month, the UAE announced that it was raising the price of fuel.

he cost of Super 98 petrol has increased to AED4.15 a litre, up from AED3.66 a litre in May, and Special 95 increased to AED4.03 a litre, up from AED3.55 in May.

In response, many UAE residents are considering switching away from petrol and diesel-run vehicles at higher rates than previously recorded, a survey found last month.

Uber announced it would be raising prices for fares in the UAE while petrol prices have continued to increase

Uber said that it would increase fares 11 percent for some trips, Uber said in an email to customers, Bloomberg reported. This marks the second time this year that the company has increased prices in the UAE.

Petrol prices have increased 56 percent since the start of the year in the UAE, Bloomberg said.

The cost of fuel is being impacted by an ongoing squeeze on energy prices and global inflation.

As such, petrol prices in the UAE have progressively risen from February this year, with global oil prices have stayed above $100 a barrel for most of 2022.

In response, UAE residents are considering switching away from petrol and diesel-run vehicles at higher rates than previously recorded, a survey found last month.

The increased prices consumers have been struggling with lately are here to stay, given the current geopolitical tensions and the continuing supply chain disruptions, said Vijay Valecha, chief investment officer, Century Financial.

And while the GCC is comparatively better off than other regions, inflation is very much a global issue nowadays, explained Valecha.

Rising petrol prices are leading UAE residents to consider a switch to electric vehicles

Rising petrol prices are causing UAE residents to consider switching away from petrol and diesel-run vehicles, according to a new survey by Audi Abu Dhabi.

More than half of the respondents surveyed by Audi Abu Dhabi stated that they are considering hybrid or electric vehicles.

Petrol prices in the UAE have progressively risen from February to April, as global oil prices have stayed above $100 a barrel for most of 2022.

“Interest in EVs has continued to grow organically over time, however increasing petrol prices has certainly accelerated the shift in consumers attitude towards EV adoption,” said Mark Austin, Audi Abu Dhabi’s general manager.

“When considering energy efficiency across the full lifecycle of producing, transporting and using fuel – typically referred to as “well to wheel” – electric vehicles offer high efficiency and the lowest carbon emissions per mile.”

While residents’ intent to buy an EV seems strong, nearly 25 percent stated that they are waiting for more options to be launched in the market to make a purchase.

Additionally, 14 percent said they recently bought a petrol car but wished they would have purchased a hybrid or EV instead.

“Depending on the type of car you drive, the average cost of filling a fuel tank can be upwards of AED 270 versus AED 8.25 to fully charge an EV battery with a 110 kWh charger. With EVs, owners also save on operating expenses,” Austin added.

The YouGov survey of 1000 UAE residents explored how the rise in fuel prices is impacting the way consumers are thinking about their means of transportation.

Residents are planning their car journeys more carefully with a quarter saying they use public transport a lot more now, while 14 percent of drivers have purchased an electric scooter/bike to use over short distances.

Remote and flexible working options are also helping residents mitigate rising fuel costs, with 19 percent saving more on fuel expenses by working from home.

Audi Abu Dhabi launched its first EV model under the e-tron umbrella nearly two years ago. Its premium electric vehicles portfolio has since grown to include four models, without compromising on the performance, design and driving dynamics expected of the brand.

Two of Audi’s latest electric spearheads are being showcased at the Electric Vehicle Innovation Summit (EVIS) in the capital from 23-25 May.

EVIS is a platform that aims to facilitate discussions and mobilise actions to accelerate the MENA region’s transition to sustainable mobility.