The ongoing tensions in the US-Iran conflict and the resulting standoff in the Strait of Hormuz continue to mirror the volatility in fuel prices throughout the UAE. However, according to industry insights, there is potential for households to experience a much-needed break in their living expenses.

The Impact of Global Tensions on Fuel Prices

Nagham Hassan, a Market Analyst at eToro, highlights the cyclical nature of oil prices in response to geopolitical tensions in the Middle East. Each time these conflicts escalate, the cost of fuel at the pump typically experiences a surge. Yet, Hassan suggests that while fuel prices grab headlines, they don’t significantly affect household budgets compared to other expenses. Specifically, he points to rent as the primary concern for many residents in the UAE, which represents a more substantial portion of their monthly financial obligations.

In an interview with Arabian Business, Hassan emphasizes that the fluctuations in fuel prices, while noticeable, are less impactful to overall household budgets than rent and other essential costs like food. He explains that prices for food and beverages have increased by about 4 percent in Dubai and 1.5 percent in Abu Dhabi over the past year. Imported goods have felt the brunt of these cost increases, making affordability of food a top priority for residents.

Current Market Conditions and Rental Trends

Globally, while prices have eased, consumer costs have not yet returned to pre-war levels. The UN’s global food price index was reported to be approximately 1.7 percent higher than the previous year as of June. According to Hassan, retailers anticipate that price stabilization will require several months. However, the UAE central bank forecasts that local prices will remain “well below global averages” due to regulations on staple commodities such as rice, flour, and cooking oil. Despite this optimistic outlook, the central bank has raised its inflation forecast for 2026, indicating that lower prices are not imminent.

Fortunately, one area seeing positive changes for residents is the housing market. For years, demand outpaced supply in the real estate sector, driving up rental prices in both Dubai and Abu Dhabi. However, recent data indicates an increase in new housing supply, which is alleviating some of the pressure on rental costs. In June, Dubai’s REIDIN index recorded a month-on-month rental decrease of 2.16 percent and a year-on-year reduction of 2.55 percent. Likewise, approximately 24,800 new homes were completed in the first half of the year, providing much-needed inventory.

Future Outlook on Housing Costs

In Abu Dhabi, the rental landscape appears to be slightly behind Dubai, with a month-on-month decline of 1.79 percent, although rents remain 3.61 percent higher than the previous year. Since June, all rental increases have been temporarily halted in the emirate, which should provide additional relief to tenants.

Hassan notes that while new leases are becoming more affordable, many existing tenants might not experience these dropping rates until their annual contracts come up for renewal. He adds that even with the central bank’s projections showing rising housing costs into 2026, the anticipated easing in the rental market could help keep inflation manageable this year.

In conclusion, the market analyst at eToro notes a gradual improvement in housing affordability, albeit in a staggered manner. For those entering new rental agreements, the current market conditions offer a favorable opportunity for negotiation. While fuel prices will continue to fluctuate, and may dominate public discourse, they ultimately constitute a smaller share of household budgets compared to housing and other essential expenses.