The Fuel Price Committee of the UAE has announced new retail fuel prices for September, lowering diesel costs due to a decline in global oil prices, which is anticipated alongside reduced demand and an increase in supply, as reported by the state news agency, WAM.
Decline in Oil Prices Amid Low Demand and Increased Supply
On August 29, oil prices experienced a decline as traders anticipated weaker demand in the United States, the world’s largest oil consumer, and a forthcoming supply increase from OPEC and its partners this fall.
Brent crude futures for October delivery settled at $68.12 per barrel, down by 50 cents, or 0.73%. The active contract for November decreased by 53 cents, or 0.78%, to $67.45.
West Texas Intermediate crude futures closed at $64.01, a drop of 59 cents, or 0.91%.
The market’s focus has shifted partly to the upcoming meeting of OPEC+, noted Tamas Varga, an analyst at PVM Oil Associates.
Crude production has risen among OPEC+ nations, as the coalition has been increasing output to reclaim market share, influencing global oil prices downward.
“We expect to see a supply increase coinciding with a market with lackluster demand,” stated Andrew Lipow, president of Lipow Oil Associates.
As the US summer driving season concludes with the Labor Day holiday, demand from this peak period diminishes.
“Market speculation is emerging regarding the potential impact of tariffs on the economic outlook next year,” Lipow mentioned, referring to the increased tariffs imposed by the Trump administration on imports from various trading partners.
Despite recent supply increases, there hasn’t been a noticeable effect in the US market, suggesting supply and demand might align closely, as per Phil Flynn, a senior analyst at Price Futures Group.
“I’m not observing the expected pessimism about demand,” Flynn remarked. “OPEC’s supply is projected to rise, but its effects haven’t yet reached the US market, indicating persistent tight conditions.”
Earlier in the week, prices surged due to Ukrainian military action targeting Russian oil terminals, but talks between Ukraine and its European allies regarding a potential ceasefire eased price pressures, Flynn added.
US crude stockpiles for the week ending August 22 showed unexpected reductions, suggesting strong late-summer demand, especially in industrial and freight sectors, according to analyst Ole Hvalbye from SEB bank.
Moreover, investors are monitoring India’s reaction to US pressure to cease purchasing Russian oil, following Trump’s escalation of tariffs on Indian imports to as much as 50% on Wednesday.
So far, India has maintained its stance, with expectations for Russian crude exports to India to increase in September, traders indicated.
“The common belief is that Russian sanctions are unlikely, and India will continue acquiring Russian oil at significant discounts despite threats from the US,” PVM’s Varga concluded.