There will be New Year joy for motorists in the UAE as the cost of filling up at gas stations is expected to fall in January by at least 10 per cent month-on-month.
It will be the first time in a year that the price of Special 95 has fallen below Dh2 a litre amid sharp falls in global oil prices during the past month.
Here's the breakdown:
• Super 98: Dh2 a litre - a fall of 11.1 per cent month-on-month
• Special 95: Dh1.89 - a fall of 12.1 per cent
• Diesel: Dh2.30 - a fall of 11.9 per cent
It will be the second month running that prices have fallen significantly in the Emirates after they dropped 12 per cent in December. Fuel prices in the UAE were liberalised in August 2015, so they now move with the market.
Prices in the UAE peaked during the summer as Brent oil went on to spike at $86 a barrel in October - the highest level since November 2014. Some traders were betting it would advance to $100 as US sanctions on Iran curbed supply.
However, the US granted waivers to eight countries importing Iranian crude for a 180-day period. Before the sanctions, Opec and its allies had increased output to make up for any anticipated oil shortage due to the sanctions.
Brent plunged below $50 earlier this week, to its lowest in more than a year on concerns about the global economy and a supply glut.
Earlier this month, Opec and its allies agreed to curb output by 1.2 million bpd starting in January in a bid to clear a supply overhang and prop up prices.
Brent was at $53.34 a barrel in trading this morning, while US West Texas Intermediate (WTI) crude futures were at $45.62 a barrel.
The world’s biggest banks are reckoning on a rebound in oil prices next year as fears of a recession prove misplaced. The Brent benchmark will average $70 (Dh257) a barrel in 2019, almost a third higher than its price on Thursday, according to a Bloomberg survey of oil analysts.
Despite plans by OPEC and its allies to limit production next year to prevent a glut from forming, oil’s fortunes have increasingly been driven by moves in financial assets and concerns about the global economy.