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Aramco Stops Oil Product Shipments To Egypt

Oil infrastructure

Saudi Aramco has suspended all shipments of fuels to Egypt indefinitely, according to a spokesman for Egypt’s Oil Minister Tarek El Molla. The shipments were part of a US$23-billion aid deal, agreed by the two neighbors this spring.

The shipments were first suspended last month with no details given, but at the time, the Egyptian side said the agreement was still in force and shipments would be resumed soon.

Now, the Saudis have apparently decided to flex their muscles after a member of El Molla’s delegation to the International Energy Forum in Abu Dhabi told media that the ministry was planning a visit to Iran to discuss energy contracts.

A spokesman for the ministry declined to comment on whether this was indeed a planned move. He said, “They did not give us a reason. They only informed the authority about halting shipments of petroleum products until further notice.”

A spokesman for Egypt’s Foreign Ministry also told Reuters that he was unaware of such a visit. The minister, however, denied the information to the media present at the Abu Dhabi event.

Aramco has not commented on the shipments halt yet; the ceased shipments will more than likely lead to an escalation of the tension between the two countries.

Reuters quoted three more sources confirming the information about an Egypt-Iran meeting. This meeting would now have to be delayed after that delegation member blew the whistle.

An earlier report by the agency quoted the initial source with saying that Cairo had decided to approach Iran after Aramco initially suspended fuel shipments to Egypt.

Egypt and Iran have not had a smooth relationship in the past. Relations were strained after the 1979 Islamic Revolution in Iran. An energy deal could put an end to these tensions, but it would put a wedge between Egypt and Saudi Arabia, which has been the biggest among regional powers providing much-needed financial help for the Egyptian economy after the Arab spring there.

Egypt, for its part, although Saudi Arabia’s ally, has been reluctant to provide public support for the latter’s campaign against the Yemeni Houthis.

By Irina Slav for Oilprice.com

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