Oil prices rise after report of US military strikes on Iran's Kish Island

A rise in fuel prices is expected in the United Arab Emirates (UAE) in November as the ongoing conflict in the Middle East sustains high global crude oil prices.

The recent escalation of regional tensions led to another increase in oil prices on Wednesday following Houthi attacks on Saudi Arabian energy facilities. The price of Brent crude rose above $116 per barrel on Wednesday morning, intensifying concerns about supply risks from a major oil exporter.

Fluctuations in global oil prices affect retail fuel prices in the UAE, as the country deregulated fuel prices in 2015 to align them with world oil prices. On Wednesday morning, WTI and Brent prices were $101.48 and $115.68 per barrel, respectively, which was 1.6% and 1.8% higher.

Fuel prices in the UAE, which reached a four-year high in October, could rise further when tariffs are reviewed this week. In October, Super 98 gasoline cost 4.40 dirhams per liter compared to 3.80 dirhams in September. Special 95 was sold at 4.28 dirhams per liter versus 3.69 dirhams the previous month, and E-Plus 91 cost 4.21 dirhams per liter, up from 3.61 dirhams in September.

December contracts in October averaged around $107.3 per barrel, compared to $102 per barrel in September, amid increased volatility in global oil prices following Houthi attacks on Saudi Arabian facilities and declining global oil reserves.

Many consumers are wondering whether gasoline prices in the UAE will surpass the previous record high of 4.63 dirhams per liter, which was reached in July 2022 after the war between Russia and Ukraine. The answer will be known on Saturday, October 31, when the UAE Fuel Price Committee announces new tariffs for November.

Daniel Takieddin, co-founder and CEO of Sky Links Capital Group, noted that the ongoing tension between the Houthis and Saudi Arabia continues to fuel anxiety. He added: 'However, diplomatic activity prevents risks from turning into a stronger rally. Regional governments have intensified contacts with Tehran in an attempt to resume negotiations, while Iran has shown some willingness to discuss a faster schedule under certain conditions. Any credible improvement in the negotiation process will reduce the perceived probability of renewed tension and eliminate part of the geopolitical premium.'

Daily crude oil production at the Ostani Paydar, Cheshmeh Khosh, and Dalipari fields in Iran reached 127,000 barrels per day, exceeding the established contractual target of 120,000 barrels per day. This was reported on Monday by the head of the Petroleum Engineering and Development Company (PEDEC).

Nasrollah Zarei noted that when the current administration took office, production from these three fields was about 41,000 barrels per day. This figure has increased to the current level thanks to development projects being carried out in collaboration with Russian companies.

Zarei added that the Aban and Western Paydar development project is close to completion and, according to him, will require another year. The second, larger project covering the Cheshmeh Khosh, Dalipari, and Ostani Paydar fields is progressing according to schedule, with about two years of work remaining until its completion.

He characterized the work of the Russian company in implementing the projects as satisfactory and also announced that plans are being developed to increase production beyond contractual obligations while maintaining current production levels. All PEDEC projects include environmental assessments, and no work begins before obtaining the necessary permits. The company is also committed to environmental standards, receiving support from officials of the Ministry of Oil to promote compliance with these norms.

Furthermore, Zarei mentioned that the company has implemented corporate social responsibility initiatives, including conducting social studies under two contracts with universities and creating a film highlighting its activities. The Cheshmeh Khosh, Dalipari, and Ostani Paydar fields are located in the western part of Iran within the operational area of the West Petroleum and Gas Company. They began production in 2011.

The contract for the development of these three fields was signed in February 2020 involving both Russian and Iranian companies, and subsequently entered the implementation phase in 2020 after obtaining all necessary permits. The goal of the project is to increase and maintain crude oil production, as well as improve reservoir utilization.

Oil prices continued to rise, reaching over $110 per barrel on Wednesday morning. The increase is driven by concerns about supplies in the Middle East and falling reserves in the US. On Wednesday, Brent and WTI grades traded at $110.4 and $99.16 per barrel, respectively, which is 1.37% and 1.47% higher than the previous period.

During the first three weeks of October, oil prices remained higher than in comparable days in September, linked to worries about military actions in the Middle East.

In the United Arab Emirates (UAE), fuel prices jumped in October to above a four-year high. This occurred due to rising global oil prices, leading to an increase in tariffs for Super 98, Special 95, and E-Plus 91 by 0.60 dirhams or 16% per liter.

In October, the cost of Super 98 was 4.40 dirhams per liter compared to 3.8 dirhams in September; Special 95 gasoline cost 4.28 dirhams per liter versus 3.69 dirhams last month; and E-Plus 91 amounted to 4.21 dirhams per liter in October, while the price in September was 3.61 dirhams per liter.

December Brent contracts averaged around $104.7 per barrel during the first three weeks of October, which is higher than $101.37 during the same period last month.

The UAE reviews retail fuel prices monthly to align with global prices. The UAE Fuel Price Committee will announce gasoline prices on October 31, 2026. Since there are 10 days left until that date, prices will be adjusted based on monthly oil prices and other factors.

Oil prices rose sharply after Iran notified Pakistan's army chief Asim Munir that negotiations with the US would not take place without meeting Iranian demands, as reported by Iranian media 'Nournews' on Tuesday. Furthermore, risks related to maritime security are increasing. According to Shiptracker Kpler, at least 18 attacks on vessels were registered in the last two weeks. LSEG analysts warn that Iran is targeting tankers far beyond the Strait of Hormuz, reaching the Gulf of Oman and jeopardizing crude oil loading in the Persian Gulf and transshipments supporting regional supplies.