Head of the General Division of Petroleum Materials, Hossam Arafat, told Egypt Oil & Gas that the reduction of subsidies on petroleum products was inevitable and had already begun in July 2014, as petroleum products prices shifted in the last fiscal year.
Arafat clarified that politics was the prime determinant of world oil prices. He said that there were fears over a potential crisis between Saudi Arabia and Iran, which would lead to the return of international oil prices to their old levels. This would then impact on the value of subsidies in the general budget and the prices of petroleum products in local markets.
Arafat further explained that the collapse of world oil prices contributed to a budget saving worth 50%, taken from subsidy allocations, adding that the decline in oil prices was the main factor in preventing fuel price inflation over the past year. The previous year has passed without any crises in petroleum products for the first time in the history of petroleum. He also added that markets would see an abundance of petroleum products till 2020 due to the decline in world oil prices, expected to bridge the gap between domestic production and consumption. This will also lead to a success in stock up fuels for the 25 day strategic reserve.