Second place finisher, Giacomo Nizzolo (Trek-Segafredo) took the lead of the general classification from Elia Viviani (Sky) after Stage 3’s 172km to Hatta Dam.
A small group of riders made the day's breakaway, including Feng Chun Kai (Lampre-Merida), Francisco Mancebo (Skydive Dubai Pro Cycling Team - Al Ahli Club), Andrew Tennant (Team Wiggins), Hayden McCormick (One Pro Cycling), David Lozano (Team Novo Nordisk) and Essaid Abelouache (Al Nasr Pro Cycling Team – Dubai).
Despite their efforts, the peloton didn’t allow them more than two minutes of an advantage. Mancebo was the last escapee to surrender with 12km to go.
The Movistar Team saved all their energy for the end of a stage that was largely controlled by Sky from start to finish. As the race hit the slopes of the final kilometres, Jasha Sütterlin and Marc Soler covered the moves at the front and kept the peloton together.
Movistar riders Nelson Oliveira, Jonathan Castroviejo and Alex Dowsett set up a brilliant leadout for the Andalusian victor, who started off the climb in the top ten and had Gorka Izagirre behind as a pressure relief and second chance.
The final 200m decisive climb had a gradient of 17 per cent. Lobato sprinted away from his challengers, beating Nizzolo and Silvan Dillier (BMC) at Hatta Dam with a comfortable margin.
“This victory makes me immensely excited and happy,” said Lobato.
“I owe everything to my team-mates for their support. We knew we had to stay calm until the downhill after the last climb and give everything afterwards.
“I knew the climb from last year's finish and it was one that I really liked and suited me. I learnt there that being in a good position into that last corner right was crucial. Last year I couldn't get things done right, but this time was the good one.”
Lobato crossed the finish line with a tribute to his son who is three months old.
"I put my thumb in my mouth on the finishing line to dedicate this victory to my son,” said Lobato.
“I also dedicate it to Adriano Malori, wishing him a prompt recovery. After this, my goal is to win Milan-San Remo. That's my dream as a rider. If only I could win half of what my compatriot Oscar Freire won in his career, I'd be over the moon."
The new race leader, Nizzolo also has plans for the victory at Milan-San Remo and will be studying Lobato closely as the race approaches. "What Lobato did today wasn't a surprise,” said Nizzolo.
“I wasn't here last year but I watched the video and I knew how good he could be on this finale.
“Ahead of tomorrow, it's better to be at the front on GC than behind."
The fourth and final stage of the Tour is a 135km that starts and ends in Dubai city and is another stage ear-marked for the sprinters.
Lobato sits in second on the GC, only two seconds behind Nizzolo. With time bonuses on offer for two intermediate sprints and at the finish line, there will be tight, tense racing for the overall title.