Egypt’s petroleum subsidies reached EGP 14b in the first quarter of currently fiscal year 2016/2017, which started in July. This came as a result that Brent is trading at a higher price than the $40/b used in state budget calculations. The Egyptian Minister of Petroleum and Mineral Resources, Tarek El Molla, stated that in order to cover 2016/2017 budget-gaps for fuel subsidies, the government is considering all possible methods to conserve the consumption of petroleum products, such as  increasing fuel prices, reported Al Borsa.

The Ministry of Finance had set the price of Brent at $40/b during 2016/2017, down from $47 that was used in fiscal year 2015/2016. Additionally, a source within the oil sector mentioned that the gap between fuel subsidy spending and budgeted amounts will widen further during the current fiscal year due volatility in foreign exchange rates.

The ministry had recently estimated that Egypt’s local market demand stands at at 500,000 tons of diesel, 150,000 tons of benzene, and 500,000 tons of mazut. Moreover, the country spends about $720m on monthly petroleum imports.