UAE Announces Increase in Fuel Prices for February 2025, Impacting Consumers and Businesses

The United Arab Emirates (UAE) has announced an increase in fuel prices for February 2025, marking a shift from the downward trend observed in recent months. The new rates, effective February 1, reflect rising global oil prices and the UAE’s policy of aligning domestic fuel costs with international market dynamics.

The UAE’s fuel price committee revealed that Super 98 petrol will cost Dh2.74 per litre, up from Dh2.61 in January 2025. Similarly, Special 95 petrol will rise to Dh2.63 per litre, compared to Dh2.50 last month, while E-Plus 91 petrol will increase to Dh2.55 per litre from Dh2.43. Diesel prices, however, remain unchanged at Dh2.68 per litre.

This announcement comes as a disappointment to consumers and businesses, who had enjoyed a period of declining fuel costs in late 2024. The increase in February signals a potential return to higher prices, driven by global market pressures.

A Year in Review: Fuel Price Trends in 2024

To understand the significance of February’s price hike, it’s essential to look back at the fuel price trends over the past year. In 2024, UAE fuel prices experienced significant volatility, driven by global oil market fluctuations, geopolitical tensions, and changes in supply and demand.

• January 2024: Super 98 petrol was priced at Dh2.82 per litre, Special 95 at Dh2.71, and E-Plus 91 at Dh2.64.
• February 2024: Prices rose slightly, with Super 98 reaching Dh2.88, Special 95 at Dh2.76, and E-Plus 91 at Dh2.69.
• March-May 2024: The first half of the year saw a sharp increase, with Super 98 peaking at Dh3.34 in May, the highest price of the year.
• June-September 2024: Prices began to stabilize, with a gradual decline from June (Super 98 at Dh3.14) to September (Super 98 at Dh2.90).
• October-December 2024: The final quarter of the year brought significant relief, with prices dropping steadily. By December, Super 98 had fallen to Dh2.61, the lowest point since January.

This rollercoaster of prices was largely influenced by global factors, including OPEC+ production decisions, the economic recovery post-pandemic, and geopolitical events such as the Russia-Ukraine conflict.

What’s Behind the February 2025 Price Increase?

The increase in UAE fuel prices for February 2025 is primarily driven by a combination of global oil market dynamics, geopolitical tensions, and policy decisions that have collectively pushed crude oil prices higher. Below is a detailed breakdown of the key factors contributing to the price hike:

1. Global Oil Prices Surge Above $81 a Barrel in January

One of the most significant factors behind the February fuel price increase is the sharp rise in global crude oil prices, which climbed above $81 per barrel in January 2025. This upward trend in oil prices has a direct impact on the UAE’s domestic fuel costs, as the country’s pricing mechanism is closely tied to international market rates.

The rise in crude oil prices can be attributed to several underlying factors:

• Increased Global Demand: As the global economy continues to recover from the lingering effects of the pandemic, demand for oil has surged, particularly in major economies like the United States, China, and India. This heightened demand has tightened global oil supplies, pushing prices higher.
• OPEC+ Production Cuts: The OPEC+ alliance, which includes the UAE, has maintained production cuts to stabilize oil markets and prevent oversupply. While these measures have helped balance the market, they have also limited the availability of crude oil, contributing to higher prices.
• Seasonal Factors: The winter months typically see increased demand for heating oil and other petroleum products, further straining global supplies and driving up prices.

The UAE’s fuel price committee adjusts domestic rates monthly based on the average global oil price, meaning that any significant increase in crude oil prices directly translates to higher fuel costs for consumers.

2. Uncertainty Around US President Donald Trump’s Tariff Policies

Another critical factor influencing global oil prices—and, by extension, UAE fuel prices—is the uncertainty surrounding US President Donald Trump’s trade and tariff policies. Since returning to office in January 2025, President Trump has signaled a return to his protectionist trade agenda, including the potential imposition of new tariffs on key trading partners.

This policy uncertainty has created volatility in global markets, including the oil sector. Traders and investors are concerned that new tariffs could disrupt global trade flows, impacting the demand for oil and petroleum products. For example:

• Impact on Oil-Exporting Nations: Countries that rely heavily on oil exports, such as those in the Middle East, could face reduced demand if tariffs make their products less competitive in key markets like the US and Europe.
• Market Speculation: The uncertainty has led to speculative buying in oil futures markets, as traders anticipate potential supply disruptions or shifts in demand. This speculation has further driven up oil prices.

The ripple effects of these policies are felt globally, including in the UAE, where fuel prices are adjusted to reflect international market conditions.

3. US Sanctions Impacting Russian Crude Exports

The imposition of new US sanctions on Russian crude oil exports has also played a significant role in driving up global oil prices. These sanctions, introduced in late 2024, aim to limit Russia’s ability to finance its military operations by restricting its oil revenues. However, the sanctions have had unintended consequences for global oil markets:

• Disruption of Russian Oil Supplies: Russia is one of the world’s largest oil producers, and the sanctions have severely curtailed its ability to export crude oil. This has created a supply gap in the global market, as other producers struggle to compensate for the lost volumes.
• Shift in Global Trade Patterns: With Russian oil exports constrained, major importers like China and India—the world’s top and third-largest oil importers, respectively—have been forced to seek alternative sources of crude. This has increased demand for oil from the Middle East, Africa, and the Americas, driving up prices in these regions.
• Higher Transportation Costs: The shift in trade patterns has also led to increased transportation costs, as oil must be shipped over longer distances to reach key markets. These additional costs are ultimately passed on to consumers in the form of higher fuel prices.

The UAE, as a major oil producer and exporter, is directly affected by these changes. While the country benefits from higher oil revenues, the increased global demand for Middle Eastern crude has also pushed up domestic fuel prices.

4. Geopolitical Tensions and Supply Chain Risks

Beyond the immediate impact of US sanctions and tariff policies, broader geopolitical tensions have also contributed to the rise in oil prices. Conflicts in key oil-producing regions, such as the Middle East and Eastern Europe, have raised concerns about potential supply disruptions.

• Middle East Instability: Ongoing tensions in the Gulf region, including disputes over maritime boundaries and attacks on oil infrastructure, have heightened fears of supply disruptions. These concerns have led to speculative buying in oil markets, further driving up prices.
• Impact on Global Supply Chains: Geopolitical risks have also disrupted global supply chains, making it more difficult and expensive to transport oil and petroleum products. These disruptions have added to the upward pressure on fuel prices.

Expert Insights: What Does This Mean for Consumers and Businesses?

Economists and industry experts have weighed in on the implications of the February price hike.

Dr. Ahmed Al-Mansoori, an energy economist at UAE University, commented, “The increase in fuel prices is a reminder of the volatility of global oil markets. For consumers, this means higher transportation costs, which can impact household budgets. For businesses, especially those in logistics and transportation, it translates to increased operational expenses.”

Fatima Al-Hammadi, a senior analyst at Gulf Energy Consultancy, added, “While the price hike is modest, it could have a ripple effect on the economy. Higher fuel costs often lead to increased prices for goods and services, as businesses pass on the additional expenses to consumers.”

For everyday consumers, the price increase means less disposable income. “Every dirham added at the pump can add up, especially for families and individuals who rely on their vehicles for daily commutes,” said Rashid Al-Khoori, a Dubai-based financial planner.

A Look Ahead: What Can We Expect in 2025?

The February price increase raises questions about what lies ahead for fuel prices in 2025. Experts suggest that the year could be marked by continued volatility.

• Global Oil Demand: The IEA predicts that global oil demand will continue to grow, particularly as major economies like China and India ramp up industrial activity. This could sustain upward pressure on prices.
• Geopolitical Risks: Ongoing conflicts and political instability in key oil-producing regions could further disrupt supply chains and lead to price spikes.
• Energy Transition: The UAE’s commitment to renewable energy and sustainability, including its hosting of COP28 in 2023, could influence long-term fuel pricing strategies. However, the transition to clean energy is a gradual process, and traditional fuels will remain critical in the near term.

Dr. Al-Mansoori noted, “While we’re seeing a temporary increase, the energy landscape is rapidly evolving. The UAE’s investments in clean energy and electric vehicles could eventually reduce reliance on traditional fuels, but for now, petrol and diesel remain essential to the economy.”

How Does the UAE Compare Regionally and Globally?

The UAE’s fuel pricing mechanism, which adjusts monthly based on global market trends, is unique in the Gulf region. Unlike some neighboring countries that heavily subsidize fuel, the UAE’s approach ensures that domestic prices reflect international market conditions.

• Regional Comparison: In Saudi Arabia, petrol prices are heavily subsidized, with Super 95 costing around SAR 2.18 (Dh2.14) per litre as of January 2025. In contrast, the UAE’s prices are higher but more aligned with global markets.
• Global Comparison: Compared to countries like the UK, where petrol prices exceed £1.50 (Dh6.80) per litre, the UAE remains relatively affordable.

This balance allows the UAE to maintain fiscal sustainability while providing reasonable fuel costs for residents and businesses.

Conclusion: A Challenging Start to 2025

The increase in UAE fuel prices for February 2025 is the result of a complex interplay of global and regional factors. Rising crude oil prices, driven by increased demand and constrained supplies, have been exacerbated by geopolitical tensions and policy uncertainties. The US sanctions on Russian crude exports and President Trump’s tariff policies have further disrupted global oil markets, creating a challenging environment for consumers and businesses alike.

While the UAE’s fuel pricing mechanism ensures transparency and alignment with international market trends, it also means that domestic prices are vulnerable to global volatility. As the world navigates these uncertainties, the UAE will continue to play a critical role in stabilizing oil markets while balancing the needs of its economy and its citizens.

For now, motorists and businesses will need to adjust to the higher costs, while policymakers and industry leaders continue to navigate the complexities of the global energy landscape. The UAE’s commitment to market-driven pricing ensures transparency, but it also underscores the need for long-term strategies to mitigate the impact of volatile fuel prices.

Disclaimer: The fuel prices mentioned in this article are based on official announcements and historical data.

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