Fuel prices in the UAE are set to surge to a two-year high in October, with both petrol and diesel becoming costlier by more than 10 fils a litre.

The Ministry of Energy announced on Thursday a hike of more than five per cent for both petrol and diesel, reflecting the global surge in crude oil prices.

The new domestic fuel prices, which will be the highest since September 2015, are effective from October 1. Price per litre of Super 98 will rise to Dh2.12 from Dh2.01 this month (up 5.47 per cent); Special 95 at Dh2.01 from Dh1.90 (up 5.79 per cent); E Plus-91 at Dh1.94 from Dh1.83 (up 6.01 per cent).

October price for diesel has been raised to Dh2.10 per litre from Dh2 per litre this month.

The steepest increase in fuel prices in the UAE was in August 2015, when, for instance, the price for Super 98 was set at Dh2.25, up from Dh1.86 in July, nearly 21 per cent increase.

On Thursday, the global benchmark Brent was trading at $57.70 per barrel, while West Texas Intermediate was trading at $52.42 per barrel.

According to analysts, the production cutback by Opec and its partners, by nearly 1.8 million barrels per day since the start of 2017, has helped lift oil prices by about 15 per cent in the past three months.

"With a rising demand for oil due to steady global economic growth, an increase in geo-political tensions (including the Kurdish independence referendum), along with the increasing speculation of OPEC's production extension, the oil prices have had a strong tailwind in recent days," Mihir Kapadia, CEO and Founder of Sun Global Investments, has said.

However, the commodity has gained a strong foothold between the $52-55 mark currently and is now rising towards $59 per barrel. This is only a sign of the confidence in the commodity, achieved after the Opec  production cutback strategy which is rebalancing the markets.

After nearly nine months after the production cuts came into place, the commodity has been pulled up steadily in the last few months.

Source: Khaleej Times