Oil Prices 2016: Saudi Arabia Cuts Off Oil To Egypt

Saudi Aramco has discontinued shipping refined oil products to the Egyptian General Petroleum Corporation, Egypt’s state oil company, as of early October, Reuters reported Monday, citing an Egyptian government official.

Egypt did not receive crucial allocations of Saudi petroleum aid this month, forcing its state buyer to intervene by rapidly increasing tenders in order to buy over $500 million in petroleum products from other sources. EGPC also plans to release tenders to purchase fuel for local consumption.

Saudi Arabia previously agreed to provide Egypt with 700,000 tons of refined oil products in a $23  billion deal signed earlier this year. The supply was to be shipped on a credit line with a 2 percent rate expected to be repaid in 15 years.

The sudden halt comes during a severe shortage in foreign currency supplies for Egypt, which in September amounted to more than $19 billion, according to Egyptian Streets. Prior to the 2011 Revolution, in which popular protests toppled long-time Egyptian President Hosni Mubarak, and subsequent political turmoil, foreign currency reserves were estimated around $36 billion.

While Egypt was the world’s 26th largest petroleum producer in 2014, according to the Energy Information Administration, it still imported over $4 billion worth of refined oil that year. In that same year, Egypt imported 6 percent of refined petroleum products from Saudi Arabia