Egypt is unlikely to cut domestic fuel prices despite a regional truce and falling global crude, according to officials at the Ministry of Petroleum. They cited a weekly funding gap of up to 45 billion pounds ($850 million) in the energy sector.
The government has budgeted 150 billion pounds for petroleum subsidies in fiscal year 2025-26, but import costs have surged beyond that. Gas import bills alone have tripled to $1.65 billion a month. The shortfall reflects declining domestic output since 2021, supply disruptions tied to regional conflicts, and rising costs such as diesel, which has climbed from $665 to $1,604 per metric ton.
While the temporary ceasefire between Washington and Tehran triggered immediate gains for the pound and local equities, sources told Al Manassa that a 45% gap between procurement costs and retail prices prevents immediate consumer relief.
No change to local fuel prices
Global Brent crude fell back on Wednesday to almost $90 per barrel from the $110 mark on Tuesday. Anxiety about the fragility of the ceasefire saw the price rise again on Thursday morning to $98. US West Texas Intermediate (WTI) followed a similar trajectory, falling from an initial high on Tuesday of $115 to near the $90 mark, before rising again late Wednesday and Thursday to near $98.
Two Ministry of Petroleum sources told Al Manassa that the dip in global oil does not necessitate immediate domestic reductions. A ministry source familiar with the pricing file stated that local decisions are linked to an integrated system including exchange rates, import costs, insurance, and state commitments to subsidy removal.
The official from the ministry’s production sector noted that the government intends to fix prices to stabilize the market following the March 2026 hike. The state currently faces continued pressure on public expenditure, with petroleum imports driving a significant portion of the national trade deficit.
Egypt suffers from a widening trade deficit due to petroleum imports, the value of which rose in 2024–2025 to $19.4 billion.
Egypt’s automatic pricing mechanism primarily weighs the three-month average of Brent crude and the pound’s exchange rate against the dollar. While the current budget assumes an average price of $75 per barrel for the 2025/26 fiscal year, the US Energy Information Administration recently forecast a price of $96 in 2026.
Investment bank Goldman Sachs was more optimistic, revising its Q2 average down to $90. However, the ministry source emphasized that prices are not adjusted based on immediate global trading fluctuations.
The official explained that the March 2026 price hike, which added three pounds ($0.06) per liter to gasoline and diesel, occurred during an exceptional period of supply disruptions. High-priced imports during the peak of the US-Israeli war on Iran widened the gap between procurement and retail costs to approximately 45%.
The second source, with knowledge of the production file at the ministry, said, “The decision to reduce local fuel prices depends on the budget’s capacity to absorb the costs, especially as the government has incurred a weekly deficit of about 35 to 45 billion Egyptian pounds ($660 to $850 million) due to the repercussions of the American-Israeli war on Iran.”
Regarding the impact of stopping the war and the calming of regional conditions, the source explained that this factor may contribute to cooling oil prices and reducing the cost of supplies, but he noted that global markets remain highly volatile, and any current improvement may be temporary.
He pointed out that the government is currently working on diversifying supply sources, whether through importing liquefied natural gas or increasing local production, to reduce reliance on high-cost spot markets, which may be reflected gradually in price stability in the future.
Gold market volatile
In the first reaction to the truce, local gold prices witnessed volatility during Wednesday trading as the price of 21-carat gold rose from 7,200 to 7,400 pounds per gram at the start of dealings, only to fall back below 7,200 on Thursday morning.
Head of the Gold and Jewelry Division at the Federation of Chambers of Commerce Hany Milad confirmed that current gold-prices volatility is primarily due to global reasons, most notably the instability of the international economic scene, in addition to local effects linked to dollar price movements.
Milad told Al Manassa that global gold hit $4,850 per ounce before retreating to $4,780 on Wednesday. He expects gold to resume its upward trend in the medium term as global conditions settle, which will likely drive domestic prices higher.
Dollar retreats.. and the stock market rises
On the exchange market, the dollar retreated on Wednesday by about 125 piasters from 54.52 to 53.27. Mohamed Abdel Aal, a board member of the Egyptian Gulf Bank, attributed the shift to market optimism following the ceasefire announcement.
Salma Hussein, head of research at Naeem Brokerage, told Al Manassa that the decline in oil and the potential reopening of the Strait of Hormuz will positively impact the pound. She expects a period of relative stability and market improvement in the short term.
The main stock market index closed up 4.1% on Wednesday, a move capital market expert Mostafa Shafie described as “cautious optimism.” He noted that international markets surged following the truce, though some sectors in Egypt faced negative pressure.
Shares in fertilizer and petrochemical firms, including Abu Qir Fertilizers and Mopco, recorded declines of 3% to 5% during Wednesday’s session. Shafie explained that these companies are sensitive to energy price shifts that dictate their production margins.
