Energy This Week | The National

It’s been one month of the Iran war, and there seems to be little respite. Just yesterday, the UAE intercepted eight ballistic missiles, four cruise missiles and 36 drones. A Kuwaiti-flagged tanker was hit off the UAE coast, the first such Gulf vessel to be struck in these waters since war broke out. Today, Iran has targeted a Qatari oil tanker with a missile. Its crew is being evacuated as I write. Kuwait’s airport fuel depot was also hit, while Bahrain’s civil defence said they put out a fire at a company, which was not named. New energy infrastructure, including desalination plants, has again been targeted, raising the spectre of more supply disruptions and impact on civilian life.

I have been away from my desk this week, but not away from the ongoing story. My friends, sources and strangers have asked the same two questions: Is it ending soon? Then they worry about the impact on their families back home, who are grappling with higher fuel prices. Even as Brent dipped below $100 a barrel on Wednesday morning, the benchmark for two-thirds of the world’s crude is still around 43 per cent higher than before the outbreak of war. The UAE’s revision of domestic fuel prices reflects that. Yesterday, motorists found out they’re set to pay 30 per cent more than what they did a month ago. While supermarkets have vowed not to pass on higher fuel prices to customers, people are already feeling the pinch. For the millions of South Asian and Arab workers who remit wages home, that number compounds. Not only are they set to pay more in the UAE, but their families are also paying more for cooking gas, transport and food that arrived on a diesel-run truck.

Filling up in the UAE just got significantly more expensive. The Supreme Petroleum Council's April prices are as follows:

Super 98 (premium/luxury engines): Dh3.39/litre, +31%
Special 95 (most passenger cars): Dh3.28/litre, +32%
E-Plus 91 (entry-level petrol): Dh3.20/litre, +33%
Diesel: Dh4.69/litre, +72%

Diesel's surge will be felt most broadly as the fuel is used in moving freight and chilling food, and for power generation at construction sites. Its increase will add to the cost of almost everything.

The UAE links retail pump prices to global benchmarks, resetting them monthly, meaning war-risk premiums translate almost instantly to reflect at the pump. Unlike some neighbours, the UAE passes global price swings through in full, without subsidy.

Bottom line: With Brent still elevated and Gulf shipping insurance premiums remaining high, the next pricing round, due in under four weeks, is unlikely to bring too much relief.

The Strait of Hormuz, through which roughly 20 per cent of global oil and a third of the world's LNG passes in normal times, remains technically open but operationally treacherous. Iran has used it less as a waterway than as a tollbooth: allowing some transits, disrupting others, and extracting maximum strategic leverage from the ambiguity. Even China, Iran's closest economic partner, has not been immune. Chinese carrier Cosco’s vessels rerouted to avoid Hormuz transit this week before eventually completing passage, underscoring how fragile confidence in the chokepoint has become even for Beijing.

The risk calculus for Gulf carriers has also escalated sharply. Iran struck Kuwait Petroleum Corporation's Al Salmi crude tanker off Dubai on Tuesday, and on Wednesday morning, three Iranian cruise missiles targeted Qatar, with one hitting QatarEnergy's Aqua 1 fuel oil tanker in Qatari territorial waters near Ras Laffan. These are the first direct strikes on Gulf state-owned energy carriers since the conflict began and mark a significant escalation.

Gulf states can no longer count on US naval cover. Trump this week told allies facing fuel shortages to "build up some delayed courage, go to the Strait, and just TAKE IT," warning the US "won't be there to help you anymore". The White House has confirmed that reopening Hormuz is not among Trump's core objectives for ending the war. A self-imposed deadline, giving Tehran until April 6 to reopen the strait or face strikes on its power grid, has already been extended once, and markets are watching closely to see whether it holds.

Bottom line: With US disengagement signalled and Iranian missiles now striking Gulf carriers inside their own waters, energy producers and shippers face a stark reality: the security umbrella is gone. War-risk premiums will surge further, and every cargo now moves at the shipper's own risk.

Damage to the Kuwait-flagged Al Salmi crude oil tanker, following a reported strike off the coast of the UAE. Reuters

Big number

The month-on-month rise in UAE diesel prices in April, from Dh2.72 to Dh4.69 per litre, was the steepest single-month fuel price increase recorded since the UAE adopted monthly benchmark-linked pricing.

Short for Protection and Indemnity Club. These are the mutual insurers that cover most of the world's merchant fleet for third-party liabilities, oil spills, crew injury and cargo damage. When Iranian missiles struck the Al Salmi and Aqua 1 this week, the first call after the coast guard was almost certainly to a P&I Club member.