Prospect of peace brings relief for car users as UAE cuts pump prices

• First reduction in four months
• US-Iran MoU behind fall in oil price
• Costs 14% less to fill with Super 95

The UAE has cut fuel prices for the first time in four months as oil retreated after the Iran war and signing of the US-Iran memorandum of understanding.

The price of Super 95 petrol, the most widely used fuel for everyday cars, will fall by 14 percent to AED3.29 ($0.90) per litre in July, the government’s rate-setting committee said in a statement.

Filling up a 45-litre car with Super 95 would now cost AED148, down from AED172 in June when prices hit a high of AED3.83 per litre in June.

The cheaper E-Plus 91 fuel dropped by 15 percent to AED3.21 per litre in July, while Super 98, which is used by luxury and sports vehicles, fell by 14 percent to AED3.40.

Diesel prices had already been cut in June from highs of AED4.69 in May but fell a further 17 percent to AED3.60 in July.

Fuel costs across the UAE have been deregulated since August 2015, when the Ministry of Energy adopted a new policy linked to global oil prices.

The cost of petrol and diesel surged after the US-Israeli war with Iran began on February 28.

Brent crude, the global benchmark, was trading at $72.39 a barrel on Tuesday morning – about the same price as before the conflict began. Brent hit highs of $126 a barrel in April and was still trading at $100 in late May.

The surge in prices was driven by months-long disruption in the Strait of Hormuz, the critical waterway between Iran and Oman through which a fifth of global oil supplies transited daily before the war.

Governments around the world have released millions of barrels of national stockpiles amid fears that inventories could drop to record lows, and some have turned to energy-saving measures to manage shortages.

Further reading:

• UAE cuts diesel prices two months after 70% hike
• From boom to brake: Gulf auto market under pressure
• Fuel prices made me consider an EV. I’m still not convinced

Progress in US-Iran peace talks and the signing of the memorandum led to a steep decline in June, despite tit-for-tat strikes between the two countries in recent days.

Analysts at investment bank Morgan Stanley have cut oil forecasts for the second time in two weeks as flows of oil through the Strait of Hormuz have returned faster than expected, Bloomberg reported.

It expects prices to average $75 a barrel in the third and fourth quarters of 2026, down from previous estimates of $90 and $80 respectively.