UAE – Mubasher: Bank of America Merrill Lynch said that the UAE’s decision to link domestic fuel prices to international standards will bring down the price per oil barrel in the government’s general budget from $69 to $60 per barrel.

The US bank described the decision as a reformatory one that will have a positive effect on the budget by around 0.7% of gross domestic product (GDP).

The overall economy for the GCC may be affected if oil price remain at current low prices, Bank of America said, adding that it expects a deficit in GCC budgets accompanied by weak growth in GDP and non-oil sectors.

Economists and experts believe that the deregulation of fuel prices by the UAE could save the government up to $29 billion annually, which would help the UAE’s finances and close the deficit that is expected to take place for the first time in years.

The UAE’s fuel price supervision committee recently said that it has been decided that the litre of 95 octane petrol will raised 24% or AED 0.42 to AED 2.14 per litre, while the price for diesel has been reduced by 29% or AED 0.85 to AED 2.05 per litre.

These prices were put into effect on 1 August.