Egypt increases fuel prices by 14-17% amid regional turmoil

In response to the intensifying energy crisis gripping the Middle East, the Egyptian government has announced up to 17% increase in the prices of petroleum products and natural gas for vehicles, Al Ahram and local sources report. 

Effective March 10, the cost of various fuels will surge by EGP 3 ($0.02) across the board, a move officials describe as a necessary measure to navigate exceptional circumstances currently destabilising global energy markets since the US-Israeli attacks on Iran.

The adjustments, which represent a jump of 14% to 17%, are the first of their kind this year and follow a previous increase in October. While the government had initially intended to freeze prices for a year, PM Mostafa Madbouly recently indicated that the state would have to resort to what he called extraordinary measures to ensure the sustainability of supplies and maintain energy security for all sectors of the state.

The Ministry of Petroleum cited the fallout from regional geopolitical developments, specifically the disruption of production and supply chains following military escalations involving Iran, as the primary driver for the hike. With maritime shipping costs and insurance premiums soaring, the cost of both local production and essential imports has reached levels not seen in years.

Under the new domestic fuel tariffs, 95 Octane petrol has risen from EGP 21.00 to EGP 24.00 per litre, while 92 Octane petrol now costs EGP 22.25 and the lower-grade 80 Octane petrol has reached EGP 20.75. The price of Diesel (Solar), a critical fuel for transport and agriculture, climbed from EGP 17.50 to EGP 20.50 per litre, and CNG for vehicles increased to EGP 13.00 per cubic metre. Domestic energy costs were also impacted, with 12.5kg LPG cylinders rising from EGP 225.00 to EGP 275.00, while the larger 25kg cylinders shifted from EGP 450.00 to EGP 550.00.

Despite these pressures, President Abdel Fattah El-Sisi said that Egypt’s economy remains in a safe zone. The government announced earlier that it was closely monitoring market trends to ensure the sustainability of supplies for citizens and vital state sectors.

The recent fuel hike will likely increase inflation after an extended period of decline. Bankers said the central bank’s Monetary Policy Committee (MPC) could either keep interest rates unchanged or raise them at its next meeting, amid expectations of renewed inflationary pressure and continued weakness in the Egyptian pound. The committee is scheduled to meet on April 2.