While confidence in oil markets…
Oil prices continue to rise…
Tarek El Molla, Egypt’s Oil Minister, is in Saudi Arabia for the 14th International Arab Conference for Mineral Resources, media reported, noting that El Molla was invited to the event by his Saudi counterpart, Khalid al-Falih.
This is the first visit by a senior Egyptian official to the kingdom after Saudi’s state-owned oil giant Aramco suspended shipments of fuels to its western neighbor last month, which came—coincidentally or predictably—after Egypt backed separate Russian and French Draft resolutions on Syria at the UN Security Council in October, angering the Saudis.
Saudi Arabia has been Egypt’s main financial and energy supply benefactor after the regime-changing Arab Spring. In April this year, the two countries sealed a five-year deal for Saudi supplies of oil products to Egypt worth US$25 billion.
The first word about a suspension in the shipments—which came without explanation—was heard in October, but at the time, Egypt’s Oil Ministry said it was confident that they would be resumed shortly, indicating that it might have been due to a technical issue. Later, however, the ministry said shipments of fuels from Saudi Arabia had been suspended indefinitely, again without Riyadh providing any reason for the move.
When Saudi Arabia failed to deliver oil to Egypt, Egypt courted Iran and Azerbaijan to fulfill its energy needs, but the thought of an Iran/Egypt alliance was likely troubling for Saudi Arabia.
Related: Obama Scraps Arctic Drilling Ahead Of Trump Presidency
At the time, Reuters quoted a member of El Molla’s delegation to the International Energy Forum in Abu Dhabi that the ministry was planning a visit to Iran to discuss energy contracts. An official spokesman for the Egyptian Oil Ministry refused to comment on the information, but three other unnamed sources confirmed that talks with Iran were on the table at the time.
The Saudi move to invite Egypt to the kingdom will further pressure Egypt and Iranian relations—which are already strained—as the Saudis struggle to find a way out of the oil price crunch without antagonizing Iran, which it needs onboard if the OPEC-wide production cap agreement is to become a reality.
This invitation for El Molla to the conference could be interpreted as a thawing in light of the fact that OPEC has now entered the final lag of the race of its last-ditch dash to stabilize international prices.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.