Higher fuel costs put company margins and consumer spending under pressure, while some sectors could benefit
Abu Dhabi, United Arab Emirates, October 2026: The latest increase in UAE fuel prices is putting operating costs and consumer spending in focus, with investors needing to assess how businesses can manage higher energy costs, according to Nagham Hassan, Market analyst at etoro.
UAE fuel prices rose by as much as 16.6% in October. Petrol now costs between Dh4.21 and Dh4.40 per litre, depending on the grade, while diesel has reached Dh4.80, exceeding the Dh4.76 recorded during the previous major fuel price spike in July 2022.
Brent crude has held around $100 a barrel, approximately 53% above its January average. However, fuel prices at UAE stations have risen more sharply over the same nine months: Super 98 by 74%, Special 95 by 77%, E-Plus by 80% and diesel by 88%.
Nagham Hassan, Market analyst at etoro said: “The gap between crude oil and pump prices matters. Households and businesses buy petrol, diesel and jet fuel, and those products have become more expensive faster than the oil they are refined from. For investors, the impact depends on how much fuel a company uses and whether it can pass those higher costs on to its customers.”
Diesel could drive further cost increases:
Diesel is particularly important because of its use in trucks, ships, agriculture, construction and factories. Higher diesel prices can feed into the cost of food, deliveries and services that depend on transport.
Dubai’s consumer prices rose 5.54% year on year in August, with food and drink prices increasing 7.39% and transport recording the fastest-rising category. These figures predate the September and October diesel increases, so subsequent inflation readings will help show how far the latest rises are passing through to consumers.
Hassan said: “Petrol increases are immediately visible at the pump, but diesel has a much wider reach across the economy. Once higher transport costs are built into the price of food and goods, households can continue to feel the pressure even after fuel prices ease.”
Airlines, shipping and manufacturers face pressure first:
Aviation, shipping and energy-intensive manufacturing are among the sectors most directly exposed. Fuel represents a significant share of their costs, and margins can narrow when ticket prices, freight rates or product prices cannot rise quickly enough to offset the increase.
Chemical producers face a similar challenge because oil and gas are also raw materials used in production.
Retail and hospitality businesses face pressure through both their operating costs and their customers. As living costs increase, households may redirect money from discretionary purchases towards essentials, leaving businesses to manage higher costs while demand comes under pressure.
Dubai’s July inflation figures illustrate how these pressures can move at different speeds. When fuel prices fell, transport inflation eased from 18.1% to 11.9%, but food inflation increased from 7.6% to 7.8%. Restaurant prices rose 4.5% over the same period, reflecting the challenge of recovering costs while keeping prices affordable for customers.
Some businesses could benefit:
Higher oil prices can support revenues for oil and gas producers. Logistics operators with the capacity to move goods around trade bottlenecks may also be able to charge more for their services. Renewable energy can become more attractive as higher fossil fuel costs improve its relative competitiveness.
Hassan added: “Over the coming quarters, investors should look closely at fuel exposure and pricing power. Companies that can recover higher costs without significantly weakening demand will be better positioned to protect their margins. Businesses with high fuel consumption and limited flexibility to adjust prices could face greater pressure on earnings.”
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