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Egypt pens two-year supply deal with Kuwait

Reporter: Yasser Hakim 丨 CCTV.com

11-18-2016 00:27 BJT

Kuwait has agreed to supply two million barrels of crude to Egypt on a monthly basis for two years. The deal comes after Saudi Arabia suspended its commitment with Egypt over oil supply.

Kuwait has moved in to supply Egypt with 90% of its petroleum needs every month for the next 2 years. It is a timely intervention, after Saudi Arabia suspended it's 5 year - monthly shipments of oil to Egypt.

"The Kuwaiti stance came at a good time especially that Egypt announced it will not revert to Iran for oil and so one of the gulf nations had to support Egypt. By refusing Iran's offer, Egypt showed it's good will and that it won't lose its political ties with the gulf nations for the sake of economic gains," Gamal Raif, business news director with October Weekly, said.

Egypt imports nearly 2.3 million tonnes of petroleum products every month at a cost of over $800 million. This is a huge bill for the cash stricken nation. And the recent devaluation of the Egyptian pound, further raised the cost of subsidising petroleum. Egypt was forced to raise the price of fuel to reduce expenditure. And the 2 year Kuwaiti deal is a breathe of fresh air for the country's budget.

"The most important aspects of the deal is that the shipments of 1 million barrels of oil every month will have a 2 month grace period starting next year. This will allow the government and economy enough time to pay the bills without a load on the budget," Raif said.

Saudi Arabia's oil suspension has alarmed many Egyptians. And although Kuwait has made up for it, Experts say its too risky for Egypt to depend on one main source for its oil needs.

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