Egypt looking at USD 65-70/bbl in fuel hedge set to take effect in July
Gov’t looking at USD 65-70/bbl in fuel hedge contracts set to take effect in July: The finance and oil ministries have started renegotiating the USD 70/bbl price they had agreed on under fuel hedging contracts set to take effect next month, a government source told the local press. The government will be looking to lock the price of crude in at between USD 65-70/bbl in its contract with JP Morgan and Citibank.
Where are oil prices now? Crude has hovered below the USD 70 mark for the better part of the current fiscal year. Bloomberg’s Brent index averaged at USD 67.46 in the past 52 weeks, close to the USD 68 / bbl used in the government’s draft FY2019-2020 state budget (pdf).
Background: We noted earlier this year that the government was set to to hedge against volatility in the price of fuel, imported wheat and cooking oil, after OPEC production cuts caused prices to jump well above the budgeted estimates last year. The contracts take effect in FY2019-2020 to help ensure Egypt meets its budget deficit target.