- September is second month without fuel-price subsidies
- U.A.E. first among Gulf oil producers to eliminate subsidies
The United Arab Emirates cut gasoline and diesel prices by between 8 and 9 percent for September, the second month during which the Middle Eastern country, OPEC’s fifth-largest oil producer, removed price controls.
The decline in retail gasoline partially rolled back an increase in August, the first month in which the government eliminated subsidies and allowed pump prices to fluctuate according to global markets. Motorists will pay 8.4 percent less for 95-octane gasoline in September than they did this month, according to data posted on the energy ministry website Thursday. The fuel will sell at 1.96 dirhams a liter and diesel will cost 9.3 percent less at 1.86 dirhams a liter, it said.
The U.A.E. is the first among Persian Gulf countries to eliminate fuel subsidies as falling oil prices erode government income. The six-nation Gulf Cooperation Council has discussed efforts to align fuel prices, though none of the other members has yet moved to allow fuel prices to follow the market. The U.A.E. previously charged 1.72 dirhams a liter, or 47 cents, for 95 -octane gasoline. Saudi Arabia, the largest Arab economy and top producer in the Organization of Petroleum Exporting Countries, charges the least for gasoline in the region at 16 cents a liter.
“We’re now back at a gasoline price that’s hardly above the old subsidized price,” Robin Mills, a Dubai-based analyst at Manaar Energy Consulting, said by phone. “This vindicates the approach of seizing the opportunity of low oil prices to cut subsidies. For others in the region with even lower fuel prices, it will be harder to ease subsidies in one step.”
Brent crude, the global benchmark, has declined 14 percent this month as a global glut of crude combined with concern that slowing growth in China may mean less oil demand.