Egypt raised domestic fuel prices on Tuesday for the first time this year, citing soaring international oil prices amid the Iran war and mounting pressure on global energy markets.
The new prices took effect at 3am local time, the country’s Ministry of Petroleum said.
All varieties of petrol and diesel rose between 14 and 17 per cent, with 95‑octane fuel now at 24 Egyptian pounds ($0.49) a litre and diesel at 20.50 pounds ($0.42), up from 17 pounds a litre previously.
The price of domestic gas cylinders increased by about 22 per cent, while compressed natural gas for cars saw the largest jump, rising by 30 per cent to 13 pounds ($0.27) per cubic metre.
The ministry said the move reflected an “extraordinary situation” in world energy markets, driven by supply disruptions, higher shipping and insurance costs and a surge in crude oil prices to their highest levels in years.
The government is expanding domestic production and exploration to reduce reliance on imports and to ensure stable supplies, it added.
Public transportation costs climbed as well, with Cairo’s governor approving on Tuesday a 1 to 3 pound increase in bus and mass transit fares. Similar increases have been made to prices of microbuses, a popular private sector alternative to public buses and the metro.
In the same vein, Egypt’s annual urban inflation rose to 13.4 per cent last month, according to data issued by the country’s official statistics agency on Tuesday, increasing by 2 per cent compared to the previous month.
The index has been on a downward trajectory since it peaked at 38 per cent in September 2023 at the height of the country’s economic crisis.
Following a series of reforms overseen by the IMF, it has continued to drop, reaching 24 per cent in January last year and dropping to half that by the same month of this year, save for a couple of circumstantial upticks over the past year.
Economist Moustafa Badra told The National that Tuesday’s inflationary rise was expected as of early last month after the US began to move its aircraft carriers into the region’s waters, spooking markets and commencing a departure of foreign capital from Egypt’s debt markets that has depreciated the value of the local currency by 10 per cent since.
The overnight move came a day after the government announced new electricity‑saving measures aimed at reducing fuel use and strengthening energy security.
The plan targets reduced lighting in public places while maintaining electricity flows to homes and industry, the government said on Monday.
Prime Minister Mostafa Madbouly also ordered governors to clamp down on electricity theft and warned that merchants caught inflating prices to take advantage of the crisis would be tried in military courts.
Worries that energy prices would increase began when Israel halted its gas imports to Egypt earlier this month citing force majeure due to severe security concerns following the joint US-Israel strike on Iran that killed its leader.
The Israeli Energy Ministry said on Monday evening that it resumed gas exports to Egypt, albeit at “limited amounts”.
When the deal was signed, Egypt was receiving 1 billion cubic feet per day, accounting for between 15 and 20 per cent of its daily consumption of 6.5 billion cubic feet.
Evidently, the resumption has not affected the upward trajectory of energy prices in Egypt.
The Petroleum Ministry said earlier this month that the halt of gas imports from Israel would not greatly drive up energy prices at home, citing the small percentage of the country’s daily consumption that it accounts for and the availability of LNG from a variety of sources.
However, Mr Madbouly during a speech late last week said that the closure of the Strait of Hormuz would most likely push up energy prices despite the government’s best efforts, framing it as a force too large to reckon with.
Tuesday's increase is the first since October last year, when Egypt raised fuel costs under its continuing reform programme with the International Monetary Fund for the second time that year.
One of the main pillars of the programme with the IMF is the phase-out of energy subsidies, with prices moving towards market levels.
The initial schedule said this would be achieved by December. However, some benchmarks under the loan programme have been repeatedly postponed because of delays in implementation.
Officials had planned, according to statements given by Mr Madbouly following the last increase, to freeze prices for at least a year but were forced to change policy after oil rose above $115 a barrel earlier this week.
Though oil prices cooled to $93 per barrel on Tuesday following US President Donald Trump's comments late Monday that the war in Iran would end "very soon", analysts war the situation remains highly volatile.
President Abdel Fattah El Sisi said on Monday that Egypt's economy remains in the “safe zone” despite regional unrest, urging calm as the Egyptian pound fell about six per cent this week to its lowest official level on record.
The government said it is managing the crisis “responsibly” to protect local markets and safeguard energy security amid geopolitical shocks in the region.
