Last week, commodities traders noticed something unusual in the spot oil markets. Representatives of Egypt’s state oil firm were suddenly making more aggressive buys, entering uncommonly large orders. Traders for the Egyptian General Petroleum Corporation reportedly purchased 560,000 tons of gas oil, more than double the September amount. And the orders required almost immediate delivery.
Since Egypt gets most of its fuel from Saudi Arabia, it wasn’t difficult to trace the cause of the sudden scarcity. The Saudis, it became apparent, had suspended deliveries of highly subsidized fuel to Egypt.
Riyadh had just fired a shot across Cairo’s bow. Fortunately in a region where the shots being fired are all too often live ammunition, this one was not lethal. Nonetheless, it was clear that Saudi Arabia was sending a stern warning to Egypt, pressuring Egyptian President Abdel-Fattah el-Sisi to fall into line on key issues of regional policy over which he and the Saudi regime disagree. Principal among them is Syria.