Egyptian president plays down Saudi suspension of oil deliveries

Posted on October 13, 2016

Abdel Fattah al-Sisi, Egypt’s president, has played down Saudi Arabia’s decision to suspend oil shipments to his country, denying that it was the result of differences between the two states over the Syrian war.

Oil ministry officials in Cairo this week said Saudi Aramco had suspended the delivery of petroleum products for October. They had been part of a wider aid package provided by the kingdom.

The move caused Egypt to issue urgent tenders to make up for the halted shipments, although officials insist there are no fuel shortages. It also sparked speculation that the two regional powers had fallen out over the Syrian conflict.

This month, Egypt upset Saudi Arabia when it voted in support of a Russian resolution on Syria at the UN Security Council. The resolution which called for a ceasefire, but made no mention of a halt to the bombing in Syria, was vetoed, but it prompted the Saudi UN envoy to describe Cairo’s position as “painful”.

In remarks quoted by Al-Ahram, the main government newspaper, on Thursday, Mr Sisi insisted the issues were unrelated. He said the oil shipments were determined by commercial agreements and we “do not know companies’ circumstances”.

He did not give any further explanation of why the shipment was halted.

Saudi Arabia has provided billions of dollars in loans, central bank deposits and oil products to support the Egyptian economy since 2013, when Mr Sisi, then the army chief, led a popularly backed coup against an elected Islamist president.

But the two countries disagree over Syria, with Riyadh supporting the removal of Bashar al-Assad, the Syrian president, and opposing Russia’s military intervention to back Damascus. In contrast, Egypt favours a solution that preserves the Syrian regime and army.

The spat comes at a sensitive time for Egypt as it hopes to conclude a $12bn bailout with the International Monetary Fund. Cairo’s agreement with the fund includes the preconditions that Egypt devalue its currency and cut fuel subsidies. Egypt has also to secure a war chest of some $5bn-$6bn in loans to enable it to fund reforms, with the funding expected to come from oil-rich Gulf allies.

An Egyptian finance ministry official was quoted on Thursday as saying that Saudi Arabia had provided Egypt with a $2bn loan, which eased fears that any dispute over Syria would have an impact on the country’s ability to secure the IMF package.

Neither government has provided details of why the Aramco petroleum shipment was withheld. But the issue has thrust the countries’ differing stances over Syria into the open, igniting a war of words between Egyptians and Saudis in the press and on social media.

On Egyptian television, a presenter suggested Egyptians should stop going to Saudi Arabia for Umrah pilgrimage trips to Mecca and Medina, Islam’s holiest sites, to deprive the kingdom of revenue.

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