Lower oil price ‘double-edged sword’ for Egypt

The fall in global oil prices will cut Egypt's fuel subsidy bill but could hit the finances of oil-exporting Gulf allies who have showered it with billions of dollars in aid.

Oil has dropped dramatically over the past six months, with Brent crude trading at $60.87 a barrel on Tuesday, down 47 percent from this year's peak just over $115 in June.

If it stays at that level, the government expects to save 30 billion Egyptian pounds ($4.2 billion) on fuel subsidies for its 86 million people in the 2014-15 fiscal year. But that is less than half the total Gulf aid it received in the last fiscal year alone.

“This is a double-edged sword,” said Justin Dargin, a Middle East energy expert at the Oxford Institute for Energy Studies.