Government stabilises fuel prices as hedging contracts defy oil fluctuations

Mohamed Adel
2 Min Read
A female employee poses with a fuel pump at a petrol station in Cairo, Egypt, February 24, 2016. REUTERS/Mohamed Abd El Ghany

The Egyptian government is seeking to stabilise the prices of petroleum products in the domestic market, for the next three months. It comes amid the stability of the value of hedging contracts against the rise of oil prices on the world market signed at the beginning of the second quarter of this fiscal year 2019/20, at a price below $65 per barrel.

A government source told Daily News Egypt that the government has fixed the prices of petroleum products, in parallel with fixing the value of hedging against price fluctuations, which protects the state budget from bearing any additional burdens.

He added that the Petroleum Pricing Committee determines the values of petroleum materials according to several factors, namely the cost of providing domestic production and the value of hedging against oil price fluctuations and the exchange rate.

The current prices of petroleum products are EGP 8 per litre for octane-92 petrol, EGP 6.75 for octane-80 petrol, EGP 9 for octane-95, and EGP 6.75 for diesel.

The price of LPG cylinders is estimated at EGP 65 for household use and EGP 130 for commercial use.

The government kept the fuel oil price for food and electricity industries unchanged.

The source pointed out that Egypt was not affected by the sudden rise in oil prices after the events of Saudi Aramco, as it has contracts hedging against high oil prices in world markets, to secure the needs of the market of petroleum and crude oil.

The committee will follow up the automatic pricing of petroleum materials, reviews the price formula on a quarterly basis, with a change cap of 10%, so that the sale price of petroleum products is linked to the domestic market, except for LPG cylinders and petroleum products used by the electricity and bakery sectors.

He pointed out that the price for an oil barrel has fallen below $60 since the beginning of this month, affected by political fluctuations in the region.

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