UAE Energy Costs: Firms Pass Supply Shocks to Buyers

UAE companies raised selling prices in October at the sharpest rate since S&P Global’s survey began in August 2009, passing higher operating costs to customers as geopolitical tensions disrupted energy and material supplies. Costs move down the chain. Households and other buyers may see them on their bills.

At Adipec 2026 in Abu Dhabi, Charles Edouard Mellagui, chief executive of UAE cable maker Ducab, told The National that supply problems affected materials and equipment needed to maintain and expand energy infrastructure. “Given the geopolitical situation and crisis worldwide, there is not enough energy for the eight billion people in the world,” he said. “That's why we see the crisis going through the roof.”

Who pays for the disruption

Mellagui said higher raw-material costs could eventually reach UAE residents. “At first, they will see it in the bill because if you have raw material going up, of course, at the end of the day, the price will escalate.” October’s business figures reinforce the warning: UAE company costs rose at their fastest pace since June 2022, driven mainly by higher purchase prices. Firms reported increases in raw materials, fuel, energy, freight, maintenance, storage and rent.

David Owen, principal economist at S&P Global Market Intelligence, said the record increase in selling prices reflected firms’ efforts to pass cost burdens to customers and protect margins. He pointed to higher fuel prices and increased charges for critical materials, and warned that inflationary risks for the UAE economy could grow in Q4, especially after successive petrol and diesel price increases.

The seasonally adjusted S&P Global UAE Purchasing Managers’ Index stood at 54.8 in October, down from 55.3 in September but above 50, the mark that signals growth. New orders and output continued to rise strongly. Employment, though, fell fractionally—the third decline in the past five months—as some firms cut headcounts to control costs while others hired to meet higher sales.

“Order book levels grew at a faster rate in October, but capacity remains limited – signalled by another sharp increase in outstanding business,” Owen said. Business confidence reached its highest level since January. Firms linked activity to construction, retail, tourism and manufacturing, while some cited regional conflict, competition and lower discretionary spending as restraints.

The apparatus of supply

Ducab kept making cables for homes, businesses and major infrastructure despite international trade disruption. Mellagui credited government support and the availability of ports, roads, lorries and trains for helping the company receive overseas materials. “We have been able to bring raw materials from all over the world ... and we are able to produce the cable, and we did not close [our operations even] for a single day,” he said.

More than 40 per cent of Ducab’s raw materials come from local sources. Mellagui said domestic suppliers helped keep production going when imports became difficult, but local manufacturing couldn’t replace international suppliers. “When you cannot import, or you import in a difficult situation, what matters is your ability as a country to produce locally,” he said. The company still depends on materials crossing borders and on the transport infrastructure that moves them.

On Sunday, Adnoc announced more than Dh60 billion ($16 billion) in local manufacturing opportunities through 2030, covering electrical and automation systems, pumps, chemicals, piping and other equipment. Adnoc said local production would shorten delivery times and reduce exposure to global supply disruptions. Mellagui said demand from major businesses could strengthen local manufacturers.

Growth, with a bill attached

Growing communities, new homes, industrial developments and AI data centres are increasing demand for electricity and the infrastructure that carries it. Ducab has supplied cables for the Al Dhafra Solar Project, Mohammed bin Rashid Al Maktoum Solar Park and Barakah Nuclear Energy Plant. Mellagui said the industry also needs to reduce electricity waste; Ducab is developing cable designs intended to minimize losses. He said energy must be secure and available as well as affordable, while rising raw-material costs can push prices higher along the supply chain.

Dubai’s non-oil private-sector activity reached an eight-month high in October, with the Dubai PMI rising to 54.6 from 54.5 in September. New business volumes increased sharply, while firms raised output and made modest staffing cuts. Selling prices recorded a record increase as local firms passed higher input costs to customers.

Daniel Richards, senior economist at Emirates NBD, said demand remained firm, although the after-effects of regional conflict continued to disrupt trade and raise costs. The Federal Competitiveness and Statistics Centre said real gross domestic product rose 0.4 per cent annually to Dh961.9 billion ($262 billion) in the first half of 2026. The non-oil sector grew 1.8 per cent and contributed 79.2 per cent of GDP. Growth continued. So did the transfer of higher costs to customers.