Oiil major Total has won a tender issued by the UAE's fuel retailer Emarat to buy an extra 100,000 tonnes of gasoline from June to September, traders said.
Petrol stations in the oil producer have experienced fuel shortages this month and traders said this has likely increased demand and prompted the tender.
OPEC member UAE relies on imports of gasoline to meet domestic demand.
Total will be paid a $9 premium to the average monthly Brent price, a trader said.
The world’s third largest exporter of crude oil saw at least six days of fuel shortages this month after supply woes saw petrol pumps at ENOC and EPPCO stations across the country run dry.
The shortfall, which the company blamed on filling station upgrades, was likely a reflection of the gap between fuel prices and the heavily subsidised cost at the pump, analysts said.
Enoc and rival retailer Emarat have suffered from rising oil prices because they buy fuel at market prices and sell it at government-set rates. The UAE has long subsidised fuel prices in an effort to cut living costs for residents, at a cost of millions of dollars each year
“It is more likely due to a shortage of funds,” said Samuel Ciszuk, energy analyst at IHS Global Insight. “This is quite a common problem in a system where the retail price is fixed and where the main entity is an importer of fuel or feedstock.”
In January, Emarat chairman Obaid Humaid Al Tayer said the company was restructuring and needed bank loans because it must sell gasoline at below-market prices.
ENOC said in April it expected to spend AED2.7bn ($735m) this year on providing fuel subsidies. The figure represents a 44 percent rise from the AED1.5bn it spent in 2010.
John Sfakianakis, chief economist at Banque Saudi Fransi, said fuel retailers may find it untenable to continue selling fuel if the price shortfall is not addressed.
“It appears that the retailers don’t find it commercially viable to keep running, despite the fact that we have seen price increases by around 30 percent in the last year at the retail level.”
