Despite the temporary suspension of US strikes on Iran on Friday evening, global oil prices remain above $90 a barrel, placing renewed inflationary pressure on Egypt due to their effect on domestic fuel and commodity prices, as the risk of renewed conflict persists.
On Friday evening, US President Donald Trump ordered a temporary halt to military strikes on Iran to under the guise of giving negotiations a chance to proceed. However, the New York Times cited hushed warnings from Gen. Dan Caine, chairman of the Joint Chiefs of Staff, about the depletion of air defense missile stockpiles and critical munitions allocated to US forces in the Middle East.
As a result, financial analysts who spoke to Al Manassa did not rule out higher domestic commodity prices over the coming months if global oil prices remain elevated, particularly as the Egyptian pound faces mounting pressure, with the dollar trading above 51 pounds following the withdrawal of foreign investors from Egyptian debt instruments.
Mina Rafik, senior analyst at Prime Investment, expects Egypt’s urban inflation rate to rise to about 15% in July. He estimates that it could climb to between 17% and 18% in the following months if the regional conflict continues.
Walaa Ahmed, head of research at Prime Securities, agreed, saying that the effect of the latest oil price rise toward the end of July would quickly appear in this month’s inflation data, lifting urban inflation to around 15%.
Egypt’s urban inflation rate jumped to 15.2% at the start of the war in March, driven by the pound’s decline and higher fuel prices. It then eased gradually during previous de-escalation efforts, reaching 14.3% in June. Headline inflation nationwide, which covers both urban and rural areas, stood at 12.2% in the same month.
However, the recent escalation of tensions in the Strait of Hormuz and the Gulf of Oman, followed by higher shipping insurance premiums, has revived concerns that oil prices could remain elevated for a prolonged period.
Analysts agree that the greatest inflationary effect will emerge over the longer term if global oil prices remain at their current high levels, because of their impact on import costs and the increased likelihood of domestic fuel price rises.
Salma Taha, head of research at Naeem Brokerage, outlined the possible inflation scenarios to Al Manassa. She said that if oil prices remain between $90 and $95 a barrel for several months, Egypt’s urban inflation rate would probably rise to between 15% and 17% by the end of the year.
If oil prices climb above $100 to $110 a barrel, alongside another increase in domestic fuel prices or further depreciation of the pound, inflation could return to between 18% and 20%.
Taha said the expected rise in inflation would significantly constrain the Central Bank of Egypt’s ability to continue cutting interest rates, as renewed inflationary pressures would force the bank to adopt a cautious monetary policy to maintain price stability and contain inflation expectations over the coming months.
Inflation concerns are not confined to local estimates. Global investment bank Goldman Sachs forecast that oil prices could rise above $120 a barrel in the final quarter of 2026 if energy supplies through the Strait of Hormuz remain disrupted, adding that it expects Brent crude to average $100 a barrel next year unless production in Gulf Arab states recovers fully before the end of 2027.
