Egypt's automatic pricing committee for petroleum products is preparing to hold two meetings in August and September to assess fuel prices in the local market, amid the return of global oil price increases and the rise of the dollar exchange rate against the pound.

A government source told "Al Arabiya Business" that there is an increase of about 20% in Brent crude pricing compared to the estimated price per barrel of oil in the state's general budget for the fiscal year 2026-2027, a gap currently borne by the state as additional energy subsidies, in addition to the dollar exchange rate rising to 51 pounds in several Egyptian banks.

Oil prices rose about 16% last week, reaching their highest levels in more than a month at $88 per barrel, after the United States and Iran intensified their attacks across the Gulf region, disrupting oil flows through the Strait of Hormuz again, along with the emergence of a new threat to shipping through the Bab el-Mandeb Strait in the Red Sea.

The source said the committee is studying two main scenarios to deal with the recent fluctuations in oil markets. The first involves continuing to monitor the global market for a month and postponing any price move if Brent crude prices continue trading at an average between $85 and $87 per barrel, allowing assessment of the sustainability of current increases before making a decision on local prices.

He added that the second scenario includes holding an emergency committee meeting if the average Brent crude price exceeds $90 per barrel and remains at those levels, which could open the door to restructuring fuel prices in the local market, given the widening gap between global prices and estimates approved in the state's general budget.

The source explained that the Egyptian budget for fiscal year 2026-2027 estimated an average Brent crude price of $75 per barrel, while current prices are around $88 per barrel, an increase of nearly 20% over the estimated levels.

He pointed out that each $1 increase in the average Brent crude price raises budget burdens by about 3 billion Egyptian pounds annually, meaning that the average price reaching $90 per barrel could add financial burdens of nearly 45 billion pounds compared to the assumptions in the current budget.

The source attributed the recent oil price increases to the return of geopolitical tensions in the Middle East, resulting disruptions in global energy trade, higher risk premiums on shipments passing through the Strait of Hormuz, along with increasing risks to navigation in the Red Sea and the Bab el-Mandeb Strait.

Increase in gasoline and diesel costs

The source said that the decline in operational capacities of global refineries raised fuel prices (gasoline and diesel) at rates higher than the rise in Brent crude price, thus the bill for petroleum product imports is witnessing record monthly jumps.

He affirmed that the continuation of regional tensions in the oil market has impacted refined petroleum product prices, which rose at a faster pace than crude oil prices due to reduced operational capacities of several global refineries, leading to increased monthly import costs for Egypt of gasoline and diesel.

The source estimated the cost of a liter of diesel in global markets at about 42 pounds currently, while the cost of a liter of gasoline is about 44 pounds, reflecting a large price gap between import costs and locally applied prices, especially for diesel, for which the state bears part of the cost to maintain price stability.

Former Egyptian Minister of Petroleum Abdullah Ghorab told "Al Arabiya Business" that the current energy situation in Egypt necessitates liberalizing fuel prices and shifting to direct cash subsidies for citizens entitled to support to deal more positively with ongoing market developments and fluctuations, especially since Egypt has become a clear importer of all types of fuels and natural gas, adding, "Cash support is the most correct and effective for the market currently."

Ghorab affirmed that the importance of price recedes in front of the necessity of providing the product to preserve market stability and the stability of operational and production processes in the country, avoiding resorting to a stricter scenario of reducing fuel and gas supplies to various state sectors.

He continued that the upcoming meetings of the fuel pricing committee in Egypt come in response to changes in prices and changes in insurance costs for oil and gas shipment carriers.

Factors for price stabilization

He pointed out that any decision to stabilize fuel prices during the upcoming meetings will remain contingent on the average Brent crude price falling to a range between $70 and $75 per barrel, along with the dollar exchange rate dropping below 50 pounds, noting that oil remaining at current levels or recording further increases does not support any direction to lower prices at present.

A government source noted that ending the military confrontation between the United States and Iran and the return of global supply chains to their normal state would alleviate current pressures on energy markets and reduce the likelihood of new increases in fuel prices within the Egyptian market.

He mentioned that Egypt imports about 700,000 tons of diesel monthly, representing about 47% of total domestic consumption, while gasoline imports amount to about 180,000 tons monthly, covering about 26% of local market needs.

Egyptian Prime Minister Mostafa Madbouly announced earlier this July the resumption of work of the automatic pricing committee for petroleum products starting from the first quarter of the fiscal year 2026-2027, aiming to link fuel prices to economic variables and global energy prices.

Egypt raised fuel prices on March 10 last by rates ranging between 14% and 30%, with the price of 95-octane gasoline rising to 24 pounds per liter, 92-octane to 22.25 pounds, 80-octane to 20.75 pounds, while diesel price rose to 20.50 pounds per liter, along with increases in the prices of car gas and butane cylinders.

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