Finance Ministry committee to begin reviewing fuel hedging offers in July
FinMin committee to begin reviewing fuel hedging offers in July: A Finance Ministry committee tasked with studying offers for mechanisms of hedging against fuel price hikes will reportedly convene for the first time in early July to begin its review, a government source tells Al Shorouk. We reported earlier this month that the ministry received offers from seven international banks and institutions looking to provide Egypt with fuel hedging solutions amid upward pressure on oil prices. Sources had told us that the committee could take up to two months to complete its work and may select more than one provider based on the best average cut-off price and repayment terms offered. The Oil Ministry is currently conducting a thorough study to determine the market’s average fuel needs over the coming year, which should help the committee with its decision. The contracts are likely to span 2-3 years, according to the source, who adds that the Madbouly Cabinet is also considering hedging against wheat price fluctuations.
Background: The finance and oil ministries were given the green light to begin talks on hedging contracts with international banks amid rising global oil prices. Next year’s state budget assumes an average price of USD 67/bbl, but Brent crude had broken the USD 80/bbl last month before falling back to a USD 75/bbl average. OPEC and non-OPEC member states agreed over the weekend to increase oil output as of July by 1 mn bpd, a move widely expected to ease upward pressure on prices.