Egyptian Oil Ministry announces Saudi Arabia’s Aramco cut off much-needed fuel exports with no reason given.
Egypt says Saudi Arabia has halted fuel shipments indefinitely in a sign of lingering tensions following a dispute over the conflict in Syria.
Monday’s move ratchets up pressure on Egypt as it implements austerity measures in the hope of securing billions of dollars in loans to stabilise its moribund economy.
Egyptian Oil Ministry spokesman Hamdi Abdel-Aziz said Saudi Arabia’s Aramco, the world’s largest oil company, stopped sending the fuel shipments to Egypt "without giving a specific timetable or reasons".
Saudi Arabia agreed in April to provide Egypt with 700,000 tonnes of fuel monthly for five years on easy repayment terms, but Egypt said last month that October’s shipment had been halted.
The Saudi government has not spoken about the matter, and Aramco did not immediately respond to a request for comment.
The move appears to have been taken in response to Egypt’s support of a UN Security Council resolution on Syria that was fiercely opposed by Riyadh.
Saudi Arabia is a leading supporter of the rebels fighting to topple Syrian President Bashar al-Assad. Egypt, on the other hand, has pushed for a political solution that might keep him in power.
Saudi Arabia provided billions of dollars in aid to Egypt after the military-led overthrow of then-president Mohamed Morsi in 2013. But that support appears to have dried up, forcing Cairo to court other patrons.
Egypt reached an agreement with the International Monetary Fund earlier this year for $12bn in loans but must implement austerity measures for it to be ratified.
After the fuel shipments were halted, Egypt signed a memorandum of understanding to import oil from Iraq, which is closely allied with Iran, Saudi Arabia’s main regional rival.
Spike in prices
Cairo floated its currency last week and cut fuel subsidies, leading to across-the-board price hikes in the Arab world’s most populous country.
The drastic move, welcomed by creditors and investors, was followed by a fuel price jump.
The economic turmoil is hurting Egyptians.
At a minibus station in Cairo, Mohamed Seddik, a hotel cleaner, asked how he would possibly be able to afford the new prices.
"How am I supposed to live if a kilo of sugar that used to cost 4.5 pounds now costs 10, and a kilo of rice has risen from three to four pounds?" said Seddik, who said he earns 1,500 pounds ($94) a month.
Analysts say there was no alternative to the tough measures, after years of political unrest battered the economy and drove away tourists and investment.
But the quick succession of measures will spike prices, said Omar el-Shenety, head of Multiples Group investment bank.
"Inflation may rise to 20 percent, or a little less, over the next year and a half," he said. It was up from 14 percent this year.
American University in Cairo economics professor Amr Adly said the measures could deepen the impact of an economic crisis caused by the dollar shortage while increasing inflation.
- Cairo floated its currency last week and cut fuel subsidies, leading to across-the-board price hikes