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UAE fuel prices: Second rate drop expected in August, but cut may be limited
Lower crude oil prices point to another reduction in UAE fuel rates for August, but analysts warn geopolitical risks and tight inventories could limit the size of any cut
- PUBLISHED: Tue 28 Jul 2026, 2:43 PM UPDATED: Thu 30 Jul 2026, 9:50 AM
UAE motorists could see fuel prices decline for a second consecutive month in August, although the reduction is likely to be much smaller than recent swings in global crude oil markets would suggest.
The outlook comes after Brent crude averaged around $87 per barrel in July, compared with $85 per barrel in June, while prices have remained volatile amid recurring tensions involving Iran, disruptions to regional shipping routes, and uncertainty over the Strait of Hormuz.
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According to Vijay Valecha, Chief Investment Officer at Century Financial, lower crude prices should feed into UAE retail fuel rates, but not fully or immediately. “Some of this month’s crude relief should carry through to next month’s petrol prices, but low product inventories and the market’s inherent stickiness mean the decline at the pump will likely be smaller and slower than the crude price swings imply, with the risk skewed toward renewed spikes rather than a smooth glide lower."
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Valecha added that if July crude prices settle around $79 per barrel versus about $82 in June, “the arithmetic points to a second consecutive cut at the pump,” with Special 95 potentially reaching around Dh3.13 per litre and Super 98 about Dh3.24 per litre.
UAE petrol prices rose steadily over three months, from April to June, due to the Iran conflict. The prices were as follows:
In July, prices fell after the US and Iran declared a ceasefire. Last month, Super 98 was priced at Dh3.40 per litre, with Special 95 at 3.29 and E-Plus at Dh3.21. Diesel is priced at 3.60.
However, analysts caution that the geopolitical backdrop remains fragile and could quickly alter the trajectory of oil prices. Madhur Kakkar, Founder and CEO of Elevate Financial Services, believes markets remain heavily influenced by geopolitical developments rather than traditional supply-demand fundamentals.
“Brent enters August around $90 after a violent round trip, and that’s the right way to think about this market as it is trading headlines, not balances,” Kakkar said. He expects Brent to average in the low-to-mid $90s during August, adding that any renewed escalation could send prices back above $100 a barrel.
Market participants are also closely tracking the response of major economies to oil price fluctuations. Joshua Owen, CEO of Lunaro Financial Services Limited, said traders have increasingly focused on the threshold at which higher energy costs begin affecting inflation and economic policy.
“Since the outbreak of the conflict, it has been noted that the US has walked back rhetoric and indeed called for ceasefires as Brent approaches the $100 mark, while tensions have resumed as the price approached the pre-conflict $70 level,” Owen said.
That dynamic suggests oil may continue trading within a broad range, creating uncertainty for fuel pricing models used across the region.
A similar view is held by Saxo Bank, which sees volatility persisting rather than a sustained rally or decline. Hamza Dweik, Head of Trading (MENA) at Saxo Bank, said the market is balancing risks to oil shipments against signs that export flows are gradually normalising.
“Our base case for August is continued volatility rather than a sustained move in either direction,” Dweik said, noting that traders are watching both potential disruptions to shipping and the prospect of diplomacy and recovering tanker traffic.
For UAE consumers, that means August fuel prices are likely to remain sensitive to developments in the Gulf. While lower crude prices and expectations of easing fuel costs support the case for another reduction at the pump, analysts say inventories remain tight and geopolitical tensions continue to embed a risk premium in oil markets.
As a result, motorists may benefit from another decline in petrol prices when the UAE announces August rates this week, but expectations of a sharp drop could prove unrealistic unless crude prices continue to retreat and regional tensions ease further.
Associate Editor Somshankar Bandyopadhyay brings more than three decades of experience to the KT newsroom. Currently, he manages the news production of the business section, ensuring that the top economic and business news of the day reaches its readers.