Why won’t Saudi Arabia send more oil to Egypt?

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Saudi Arabia has completely halted oil shipments to Egypt indefinitely due to an apparent strain in relations between the two countries.

The news comes less than a week after Egypt’s government decided to increase subsidized fuel prices by 47 percent, placing an added burden on its economically struggling population.

“[Saudi Arabia] did not give us a reason,” an oil ministry official told Reuters. “They only informed the authority about halting shipments of petroleum products until further notice.” Shipments ceased as of October.

Here’s a look at what’s happening.

1. Egypt and Saudi Arabia sparred over Syria and Yemen

 

Egypt recently supportedUN Security Council resolution on Syria that was strongly opposed by Saudi Arabia. While Saudi Arabia has maintained support for rebel groups fighting against the Iranian and Russian-backed Syrian President Bashar al-Assad, Egypt has put its support behind a political solution that could likely see Assad hold onto power.

In Yemen, where Saudi Arabia is leading a coalition fighting against Iranian-backed Houthis rebels, Egypt has remained unwilling to join the conflict. These two disagreements have drawn a wedge between the two governments, particularly as Saudi Arabia becomes less confident in Egyptian President Abdel Fattah al-Sisi’s ability to address his country’s economic woes.

2. The oil was part of a $23 billion aid package

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Saudi Arabia’s King Salman visited Egypt in April and agreed to send 700,000 tons of refined oil products per month for five years under a $23 billion aid deal.

Ever since Sisi took power in Egypt, Saudi Arabia and other Gulf nations have pumped billions of dollars of aid into the country’s struggling economy. But, as the economy has continued to worsen and Sisi has remained reluctant to support the foreign policy decisions of the Gulf, tensions have risen.

3. Rumors surfaced that Egypt would seek oil from Iran

 

A source close to Egypt’s Oil Minister Tarek El Molla said that the minister would visit Iran – Saudi Arabia’s main regional rival – to make a new oil deal, according to Reuters. But, as the news became public, Molla denied plans to visit Tehran. An Iranian oil official also denied the reports.

Two security sources and the source in Molla’s delegation told Reuters that the minister had been scheduled to visit Iran, but had delayed the visit after the news became public. Iran and Egypt have had a strained relationship since the 1970s, meaning any oil deal would be a dramatic shift in policy between the two nations.

Egypt has already signed a memorandum of understanding to import oil from Iraq, a regional ally of Iran.

4. Egypt just raised fuel prices to secure an IMF loan

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A petrol station in Cairo. Source: WikiMedia

The country just cut fuel subsidies, hiking prices by as much as 47 percent. The subsidy cut was the last step needed for Egypt to secure a $12 billion loan from the International Monetary Fund (IMF).

Earlier this year, IMF Managing Director Christine Lagarde told Egyptian officials that they needed to address their country’s exchange rate issues and curb energy subsidies before the loan could be made.

Last week, Egypt’s central bank also announced that it would begin floating the pound, devaluing the currency by nearly 50 percent.

5. Ordinary Egyptians are struggling

 

Although some experts have hailed Egypt’s recent economic reforms as positive steps, average Egyptians are feeling the burden. An economics professor at the American University in Cairo, Amr Adly, told Al Jazeera that the measures could deepen country’s economic crisis.

The country has faced a severe dollar shortage and the pound has suffered. Subsequently, Egyptians have been confronted with rising prices.

The absence of sugar on supermarket shelves and corner shops highlights this. Egyptians are struggling to afford and find the essentials of daily life.

One Egyptian tuk-tuk driver recently achieved viral fame criticizing the government’s handling of the economic crisis saying: “Before the presidential elections, we had enough sugar.”

“It is shameful for this to happen to Egypt.”

Source: stepfeed.com

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