The international prices of oil and gas remain among the most powerful levers shaping the global economy, particularly at a time when key energy exporters like Russia and Iran are entangled in escalating conflicts

Oil prices followed a generally downward trend for most of the year leading to the Iranian-Israeli war. Brent crude, the benchmark for global oil prices, dropped from around $80 per barrel in January 2024 to $68-69 in the first week of June 2025. Then, the atrocities of the war and the ambiguity of its outlook cast a shadow on international oil markets and caused a 7 per cent rise on the first day of the war to settle at  $76, 5 days later. Also, European Gas prices were 6.6% higher during the same period.

No one can tell if the price will continue inching upwards, as it is dependent on the developments in the Israel-Iranian confrontation. A webinar hosted by BMI Fitch Solutions, a leading provider of data and analytics, on June 17 concluded that the oil prices could move anywhere between $60-65 in the case of reaching a deal and $100-150 if the conflict expanded and Iran closed the Hormuz Strait.

Egypt, already grappling under the weight of losses of the Israel-Gaza war, mainly manifested by the 60% decline in revenues of the Suez Canal (one of its main hard currency earners) is poised to face further economic strain if things worsen, like all oil and gas-importing countries.

Egypt is a net exporter of crude oil, bunker fuel, and jet fuel, while also being an importer of refined petroleum products and gas. While low oil prices reduce the cost of imports, they also diminish revenues from exports and vice versa, according to Maha Rasheid, an economist at Dcode Economic & Financial Consulting.

For example, while the decline in oil prices during the first half of 2024/2025 eased the pressure on the trade balance, this was more than offset by rising imported quantities as domestic hydrocarbon production declined. In H1 FY 2024/25, oil prices were 9.5% lower year-over-year (y-o-y), while hydrocarbon imports surged by 53%.

With oil and gas prices climbing, Egypt’s import bill is set to rise, not only due to costlier energy but also because the country must offset reduced Israeli gas flows with additional imports. The shutdown of both the Leviathan and Karish gas fields—previously supplying over half of Egypt’s gas imports—has further strained supply. Meanwhile, only one of the three floating storage and regasification units (FSRUs) Egypt agreed to lease is currently operational, limiting its capacity to respond swiftly to the shortfall and widening the trade deficit.

The government has activated an emergency plan based on prioritising gas allocations and shifting some power stations to work on Mazut to avoid the painful load shedding.

For Egyptians, talking about oil prices translates to worries about possible increases in local fuel oil prices. The government increased prices four times since the beginning of 2024. It is committed to phasing out its energy subsidies by the end of 2025, according to its deal with the IMF.

Speaking to Egypt Oil and Gas a few days before Israel’s first hit on Iran, Rasheid said that with the back-then low oil prices, the gap between subsidized and actual costs remains narrower, allowing the government to adjust domestic prices or reduce subsidies with less pain on the public

Ramona Mobarak, Senior Director  MENA Country Risk at BMI, a Fitch Solutions company, agreed validating the argument by the fact that until the week ending on June 13, Egypt needed to increase the price of Gasoline 95 by about LE1 per liter, Gasoline 92 by about LE3 per liter and Gasoline 80 by about LE4, in order to eliminate the gap between international prices and pump fuel prices in Egypt. The 2025/26 Egyptian budget was initially predicated on an oil price of $82 per barrel.

A further increase in oil prices will, of course, widen the gap between local and international prices, and lead to several hikes in local fuel prices till the end of the year.

But would the IMF agree to delay the 2025 deadline plan, whether the oil prices surge or drop?

The fuel subsidy reform in Egypt, according to Rasheid,  is not just about short-term savings; it rather anchors itself on long-term policy frameworks aimed at restoring fiscal balance.

“Past delays in subsidy reform have cost the government billions over several years. Also, slowing down or reversing course can strip away policy integrity, undermine their credibility, and send negative signals to markets and potential global investors,” she stressed.

As for remittances which saw unprecedented increase last year thanks to the government ‘s liberalizing the forex market , making it easier on them to transfer money at the official price can both negatively and positively affected by the war.

Medhat Nafie, an economic expert wrote in his weekly column in Al Masry Al Youm newspaper, that the rise in oil prices strengthens the budgets of the oil-rich Gulf countries, and are the largest market for Egyptian labour, which may push the remittances of Egyptians there to rise further.

However, any slowdown in the Gulf economies, as a result of a prolonged escalation or global trade turmoil, may cast a shadow over employment and the ability to save, and thus the volume of remittances.

The remittances increased by 82.7% y-o-y in the first nine months of the current fiscal year, with Egyptians abroad sending back home $26.4 billion.