The global reduction in oil prices is expected to reduce the petroleum import allocations in Egypt’s state budget, Cairo University Economics Professor Farag Abdel Fattah said Tuesday.
Crude oil prices have slumped to their lowest level in five years amid expectations of increased oil market supply cited by Morgan Stanley, which lowered its 2015 forecast for Brent crude.
Abdel Fattah added that the global trend might decrease Egypt’s budget deficit estimates by 10%. However, he stressed that the country does not import crude oil, but instead imports petroleum products.
The US-based bank added that Brent crude prices could fall to $53 per barrel in 2015, compared to an earlier estimate of $98, to mark the lowest level since October 2009.
Increasing US shale output has urged the Organisation of the Petroleum Exporting Countries (OPEC) to lower prices in anticipation of oversupply, with the aim of managing supplies.
The price of crude oil stood at $66 per barrel on Tuesday, according to Reuters.
Reducing oil prices is expected to threaten oil exporters’ economies, including Venezuela, Iran, and Russia. Meanwhile, the largest oil producer Saudi Arabia, which supplies around 40% of the world’s crude, and its Gulf allies have refused to reduce oil production and opted for maintaining the current level.
Egypt, which has the largest oil refinery capacity in Africa, has to import petroleum products in order to make up the shortfall caused by a decline in refinery output by 28% from 2009 to 2013, according to the US Energy Information Administration.
According to OPEC’s Annual Statistical Bulletin, Egypt imported almost 170,000 bbl/d (barrels per day) of petroleum products in 2013. Egypt also plans to import 450m cubic feet per day of liquid natural gas, potentially from Russia’s Gazprom, Algeria’s Sonatrach, and France’s EDF, according to several reports.