The October fuel-price hike might be the last, provided current global oil prices hold, said Prime Minister Mustafa Madbouli recently, while stressing that subsidies for diesel will remain unchanged as it is the fuel that is most used for transportation and agriculture.
The last time the government increased fuel prices was in April, when it said that it was committed to reaching cost-recovery levels by the end of December this year.
April saw the second surge in fuel prices in six months, and the increase covered all types of fuel as well as diesel. The price of 95-octane petrol rose from LE17 to LE19 per litre, 92-octane from LE15.25 to LE17.25, and 80-octane from LE13.75 to LE15.75, increasing by 11.7 per cent, 13 per cent, and 14.5 per cent, respectively.
While Madbouli did not elaborate on the size of October’s pending rise, it is not expected to be high due to the easing of inflation, the pound gaining momentum versus the dollar, and existing short- and medium-term oil import contracts, according to observers.
The government has been following a programme to phase out these subsidies since 2016 as part of its structural reforms prescribed by the International Monetary Fund (IMF). The anticipated hike would coincide with the fifth and sixth reviews of the IMF’s loan programme to Egypt, expected to take place in October.
In the light of the decrease in global oil prices, Medhat Youssef, former deputy chairman of the Egyptian General Petroleum Corporation, said the unsubsidised price of 95-octane would be LE28 per litre, while 92-octane would cost LE20, and 80-octane LE17.
Former petroleum minister Osama Kamal estimated that local production costs of 95- octane petrol range between 70 and 75 cents per litre, adding that the cost should therefore be around LE35.
However, he noted that the state determines sale prices based on global benchmarks, domestic production levels, and the subsidy allocations it designates. The government’s fuel subsidy allocations in the 2025-26 budget are half their level in 2024-25 at LE75 billion.
Youssef said that any increase in local crude oil production would help to reduce the real cost of fuel, noting that the price of 95-octane petrol could hover around LE21 per litre. He cautioned, however, that prices are likely to rise again if global crude prices increase or if domestic production declines, as this would lead to the need to import larger volumes of crude oil.
“It is unlikely that the next increase will bring prices up to their real cost,” Youssef said. He explained that after the expected rise in October, the Automatic Pricing Committee would intervene, limiting future increases to 10 per cent rather than the sharp hikes seen in the past.
In 2019, the government announced the launch of an Automatic Fuel Pricing Mechanism, starting with 95-octane petrol and later extending to other grades, under which prices would be reviewed every three months based on global prices and the exchange rate.
Since then, petrol and diesel prices have been linked to international markets, though the government has continued to carry out limited interventions to shield consumers from sharp fluctuations.
During his recent meeting with the editors of local newspapers and news websites, Madbouli said that following the next increase fuel prices would be adjusted automatically, upwards or downwards, according to market conditions.
However, diesel would continue to receive partial subsidies, covered in part by setting the prices of other petroleum products slightly above cost, given diesel’s significant impact on business expenses and its influence on inflation.
The Automatic Pricing Committee was scheduled to convene at the end of September to decide petrol, diesel, and butane gas prices for the final quarter of the year, amid expectations of an increase not exceeding 10 per cent.
Youssef said that diesel is currently the furthest of all petroleum products from its real cost, which hovers around LE20 per litre or LE6 higher than the current market price.
He ruled out the possibility of major subsidy cuts on diesel, expecting only a limited increase given its sensitivity as a product that directly affects the cost of most goods and services, from food and beverages to transportation.
Raising fuel prices remains one of the most significant drivers of inflation, which the government wants to cool down. Madbouli said in August 2024 that the government is targeting a decline in inflation to below 10 per cent by the end of 2025 or early 2026.
Hani Geneina, head of research at Ahly Pharos, said that since September did not witness any rise in fuel prices, the inflation rate for the month would hover at around 10 per cent. This, he added, would allow the Central Bank of Egypt (CBE) to continue its plan of lowering interest rates. The CBE is set to decide on interest rates at a meeting on 2 October.
Geneina expects that the next fuel-price hike could range between 10 and 15 per cent, given falling global petroleum prices. Accordingly, he expects inflation in October to rise by two to 2.5 per cent, bringing the overall rate to between 11.5 and 12 per cent.
This level is manageable, he said, giving policymakers room to proceed with interest rate cuts.
* A version of this article appears in print in the 2 October, 2025 edition of Al-Ahram Weekly
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