Shifts in Saudi Arabia’s oil production strategy may soon have stark implications for Egypt, according to a news report late last week.
“Egypt has not received October allocations of petroleum aid from Saudi Arabia, traders told Reuters, forcing its state oil buyer to rapidly increase tenders even amid a severe dollar shortage and growing arrears to oil producers,” the news agency reports. The state oil company, Saudi Aramco, had previously inked a five-year, $23-billion deal to supply Egypt with 700,000 tonnes of refined oil products per month. “Delivery of the Saudi Aramco products was halted as of October 1, though the reason remains unclear.”
The infusions of oil aid began after mass protests drove Egyptian President Mohamed Morsi out of office in 2013. Saudi Arabia’s support “has saved Egypt hundreds of millions of dollars per month, at a time when it faces an acute shortage of hard currency that has forced it to ration dollars for key commodities and negotiate long-term credit arrangements with oil producers to keep critical supplies flowing,” Reuters notes.