Fuel price increase in the pipeline, diesel may be excluded

The Automatic Pricing Committee for Petroleum Products is leaning toward new fuel price increases averaging about 10% during the fourth quarter of the current year, according to a source familiar with the pricing file at the Ministry of Petroleum.

The source attributed the expected hike to a sharp rally in global crude prices alongside the continuous rise of the US dollar against the Egyptian pound. The dual pressure has widened the gap between the budget’s underlying baseline projections and real procurement costs, threatening to stretch state energy subsidy allocations well beyond fiscal targets.

To address the fiscal gap, the committee plans to hold a consultative meeting within the next two weeks to review oil prices, currency fluctuations, and local fuel provisioning costs ahead of a formal session to finalize fourth-quarter rates. According to the source, officials are weighing multiple scenarios for the prospective hike.

Under the first scenario, the committee would raise gasoline prices while freezing diesel rates until early 2027 to cushion the immediate impact on transit and basic goods costs.

The second scenario proposes across-the-board fuel hikes of at least 10%, matching technical estimates of the minimum increase needed to ease fiscal pressure on state energy subsidies.

Technical reports prepared by the Egyptian General Petroleum Corporation (EGPC) ahead of the September meetings highlight the growing disparity between budget assumptions and market realities, the source told Al Manassa, requesting anonymity. Budget estimates were calculated on an average price of $75 per barrel of oil, while Brent crude prices rose over the past months and briefly surpassed $109 per barrel on Monday, amid renewed pressure on oil exports from the region, before currently settling near $107.

Pressure on domestic pricing is further compounded by refinery import dependencies and currency volatility. Egyptian refineries process 750,000 barrels of crude daily, requiring 250,000 barrels in foreign imports to supplement the 500,000 barrels produced domestically.

With the US dollar recently topping 52 Egyptian pounds, currency rates have well exceeded EGPC’s internal hedging benchmark of 49 pounds and the state budget baseline of 47 pounds per dollar. Sustained trading above these levels inflates raw crude and refined product import costs, leaving domestic price adjustments as the primary mechanism to maintain the sector’s financial balance.

The pending review follows a government decision in March that raised the price of all types of gasoline and diesel by about 3 pounds ($0.06) per liter, bringing the price of a liter of 95-octane gasoline to 24 pounds ($0.46), 92 gasoline to 22.25 pounds ($0.43), and 80 gasoline to 20.75 pounds ($0.40), while the price of a liter of diesel reached 20.50 pounds ($0.39).

This came after the government slashed petroleum product subsidy allocations for the current fiscal year to about 15.8 billion pounds ($303 million), compared to 75 billion pounds ($1.44 billion) in the previous fiscal year.