The war on Iran hit home this week as the government decided on Tuesday to raise fuel prices by up to around 14 per cent for premium Octane 95 to around 17 per cent for diesel. The price of cooking gas cylinders also increased by 22 per cent. According to a Ministry of Petroleum statement, the move comes in light of the exceptional situation resulting from geopolitical developments in the Middle East and their direct impact on global energy markets, which have led to a significant increase in the cost of imports and local production. Disruptions in supply chains, rising levels of risk, and higher maritime shipping and insurance costs have resulted in a sharp surge in global prices of crude oil and petroleum products, levels that energy markets have not witnessed in years, the statement read.
“The move to hike fuel prices had been waiting to happen, but it came sooner than expected which means that the crisis is hitting harder than planned,” Mohamed Badreldin, vice president of public policy at N Gage Consulting, a government relations firm. He explained that the government had planned to reach cost recovery levels and remove subsidies on most fuel products this year as part of its agreement with the International Monetary Fund (IMF). However, this was the target when oil was trading at around $60 per barrel, but now that it is above $100 there is no other option because the government budget does not have space to manoeuver in the new circumstances, he said.
In the same framework, the Central Crisis Management Committee approved during its meeting on Monday a package of government measures aimed at rationalising spending and consumption as a means of mitigating the repercussions of the military escalation in the region. The package includes cancelling government events, reducing official travel, and other measures that will be announced later, according to Cabinet Spokesperson Mohamed Al-Hommosani.
President Abdel Fattah Al-Sisi said this week that despite the surrounding regional and international circumstances and the magnitude of the challenges, Egypt’s economy remains stable and resilient.
Speaking at the Armed Forces 43rd Cultural Symposium Al-Sisi said he hoped the ongoing war in the region will not impact Egypt as hard as the war in Gaza, which began in October 2023. “We have sustained losses nearing $10 billion in Suez Canal revenues as a result of the war in Gaza, in addition to other direct and indirect consequences,” he noted.
Prime Minister Mustafa Madbouli said Egypt was facing a critical situation as a result of the US-Israeli war on Iran this week, emphasising that the government is closely monitoring the repercussions of the war on the economy and local market.
Addressing a meeting with the heads of House of Representatives committees this week, Madbouli said the escalating military situation in the region and the inherent risks of a wider conflict necessitate national unity to bolster the state’s resilience against potential economic and security repercussions.
He pointed to the rise in oil and gas prices, as well as the increase in transportation and insurance costs, noting that the government is “working hard to provide energy supplies in different ways”.
Madbouli said the government has put in place plans to secure gas reserves to achieve market stability and assured his audience that “there will be no electricity cuts for households or gas cuts for factories,” indicating that the government has started drilling 106 new oil and gas wells in different areas to meet future needs.
He also pointed out that since the outbreak of the first Iran war last June, the government has been taking proactive measures that include bringing in regasification ships and working hard to increase the local production of gas and other energy resources, in parallel with encouraging foreign companies to pump in more investments to boost local production.
When that war broke out on 28 February, Madbouli said the government had been forced to make the decision to “partially halt energy and gas supplies” to some industrial sectors.
He stressed that when that phase was over, the decision was made to work on “securing the state’s needs in full for all sectors”, whether for electricity, industry, or others, to ensure that it would not be affected by any other conflicts that might arise in the future.
He referred to the government’s success in securing the country’s strategic energy needs before the outbreak of the current crisis.
Madbouli affirmed that the government has worked to bring in several regasification vessels, increase production capacities, and pay off a large part of the dues owed to foreign partners to enhance confidence in the energy sector.
He said that the government has “concluded contracts to bring in gas shipments at preferential prices” in cooperation with a number of countries and international companies, in order to ensure the security of energy supplies for Egypt for a long period to come.
He explained that these proactive moves have made the Egyptian state today, with the outbreak of war and the cessation of gas supplies from neighbouring countries (notably Israel), “ready, prepared, and able to deal with this matter”, directing a message of reassurance to the public regarding the stability of the energy sector and the state’s ability to absorb the repercussions of the current crisis without affecting the services provided.
Madbouli said that the government is closely monitoring the effects of the regional war on the Egyptian economy and taking the necessary measures to deal with it in the light of plans prepared in advance.
“I can reassure citizens that the government has put in place plans to secure the country’s stock of strategic goods,” Madbouli said.
He added that the exchange rate is flexible and based on supply and demand, and that the Central Bank of Egypt (CBE) is moving flexibly in accordance with this. The state has sufficient dollar reserves to meet market needs, and there is no dollar crisis, he said.
IMF: The International Monetary Fund (IMF) announced this week that Egypt will receive a $2.3 billion injection under a $8 billion assistance programme.
Mohamed Suleiman, head of the House’s Budget Committee, said the latest disbursement from the IMF could not come at a better time. “It sent a very positive message about the Egyptian economy to investors, not to mention that it will help absorb the war shocks and keep the local exchange rate stable,” Suleiman said.
By the close of business on 10 March, the Egyptian pound had fallen to a new low against the dollar, trading at around LE53 to the dollar amid reports of short-term investment outflows. Since the US and Israeli attacks against Iran started on 28 February, the Egyptian pound has lost around 15 per cent of its value against the dollar.
Madbouli explained that the country’s strategic reserves of essential commodities are sufficient for several months, and that Egypt is nearing the collection of approximately five million tons of wheat from the local market during the current harvest season.
He stated that a prolonged war will not alter the government’s commitment to ensuring price stability and safeguarding the interests of citizens and industry, while firmly enforcing the law against any attempts at monopolisation or illegal price increases.
He warned that any violations will be dealt with decisively, and that the government will intervene to protect consumers despite its free-market policies. He said he had issued directives to ministers and governors to intensify market oversight.
On Sunday, Madbouli held two separate meetings, the first with ministers and governors, and the second with head of the Competition Protection Agency Mahmoud Momtaz and head of the Consumer Protection Agency Ibrahim Al-Signi, to coordinate the fight against monopolistic practices.
President Abdel-Fattah Al-Sisi said this week that he has instructed the government to take a hard line against any price-gougers or hoarders taking advantage of the war on Iran.
“I directed the government to probe the possibility of referring those accused of manipulating the market for their own interest to the military courts,” Al-Sisi said, noting that “Egypt is now in an economic state of near-emergency as a result of the Iran war, and it will not be enough for the state to rely on consumer-protection fines alone and other standard measures to stabilise the domestic market during the conflict.”
He warned that “runaway inflation” could come back due to the war. “The current crisis might have repercussions on prices due to the expected spike in international energy prices,” Al-Sisi said.
Madbouli also said that the repercussions of the current crisis are not limited to the uncertainty of its duration, but they might extend to severe impacts on supply chains, referring to shipping lanes that have almost halted and gas production facilities that are threatened with shutdown, consequently causing a significant increase in global energy prices.
Badreldin, of N Gage Consulting, concurred regarding the potentially grave economic repercussions of the war. One of his concerns is the exchange rate and how this will impact prices, noting that the war will create global inflationary pressures, and import costs will increase, particularly for food and energy.
He pointed out that the region uses a lot of fertilisers, which means agricultural products are expected to become more expensive as fertiliser prices increase with supply disruptions. In 2024, Saudi Arabia, Iran, and Israel collectively accounted for 61 per cent of fertiliser output, totalling over 44 million tons, according to Indexbox, a market intelligence platform.
Badreldin warned that in times of war, many countries also restrict exports to secure their domestic supply, which further tightens global markets.
In the short term, Badreldin said several sectors will be affected. Companies that export to the Gulf countries are likely to face difficulties, as they may struggle to sell their products there and will need to search for alternative markets. Even routing shipments through Saudi Arabia before sending them to other Gulf countries still involves considerable logistical difficulties, he noted.
Moreover, tourism will also be affected, he said. Gulf tourists represent an important share of visitors to Egypt. In 2025, Egypt received one million tourists from Saudi Arabia alone.
Retail and import-dependent sectors could also suffer, he noted, explaining that when companies that rely on imports cannot obtain products, they may be forced to close and suspend operations.
Nonetheless, Badreldin said the overall impact will depend largely on how long the crisis lasts. The longer it continues, the greater the economic consequences. Two key questions will determine the scale of the impact: when the war ends and how long it takes for trade to return to normal patterns, he said.
“Even after a conflict ends, it can take time for business activity, shipping routes, and investor confidence to recover.”
PRIORITIES: The crisis may also reshape investment priorities in the Gulf, Badreldin added.
In the future, he said, the Gulf countries might allocate more resources to improving infrastructure, particularly road networks and logistics systems, to facilitate the movement of goods across their region.
They may prioritise financing their domestic development plans and infrastructure projects before investing abroad, he said, which could influence investments not only in Egypt but also in the US and other markets.
Egypt has seen substantial Gulf investments in the past two years, notably in projects like the Ras Al-Hekma and Alam Al-Roum development projects on the North Coast.
In the light of these challenges, Badreldin advised, crisis management should focus on supporting investors and businesses. The state needs to help exporters find new markets and facilitate trade procedures for them, especially since it may become difficult to deliver goods to Gulf markets, he said.
“The priority is to support exporters and businesses that generate foreign currency, helping companies maintain production and exports,” he noted.
He added that any sector affected by the crisis should be supported in order to prevent companies from closing and to protect jobs.
Meanwhile, Badreldin said plans to list state-owned companies on the stock market should be approached cautiously. Rather than offering several companies at once, it might be better to proceed gradually, listing one company at a time and observing how the market responds before moving forward with additional offerings.
Government officials told Enterprise Press in mid-February that it would sell stakes in 20 companies.
The stakes sale is part of the government’s commitments to the IMF and is meant to broaden private-sector participation in the economy and attract investments.
The programme with the IMF, expected to conclude at the end of this year, has pushed forward measures aimed at improving revenue collection, rationalising public spending, and enhancing transparency in monetary and fiscal policies.
Badreldin worries that should the crisis draw on, Egypt would need to revert again to the IMF for additional funding, which would further inflate Egypt’s external debt.
IMF Managing Director Kristalina Georgieva said on Monday at a symposium in Tokyo that lengthy hostilities in the Middle East would risk hitting markets and economies, while throwing up unexpected challenges that require policymakers to prepare for a “new normal”.
Madbouli has outlined the pillars of the government’s draft budget for the 2026-2027 fiscal year, which focuses on deepening partnerships with the business community, maintaining fiscal discipline, and implementing a strategy to improve debt indicators.
The deadline for the Finance Ministry to submit its new budget for the 2026-2027 fiscal year to the House of Representatives is 31 March. MP Suleiman said it will be working on different possible scenarios, including one in the event that the war in Iran stretches on.
Madbouli said that the ministers responsible for running the economy held a meeting this week to discuss measures in collaboration with the CBE and develop a set of scenarios based on the Iran war lasting for different periods.
“The only problem lies in the difficulty of forecasting the duration of the war,” he said, which has necessitated the preparation of more than one scenario to deal with the situation in the event that the war continues for a month, two months, or several months, in order to ensure the flexibility of the Egyptian economy and its ability to adapt to time-related variables in the conflict.
According to Madbouli, Egypt’s economy recorded a growth rate of 5.3 per cent during the second quarter of the current fiscal year (2025-2026).
* A version of this article appears in print in the 12 March, 2026 edition of Al-Ahram Weekly
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