Cairo

The Egyptian cabinet has agreed to purchase one million barrels of oil from Iraq monthly, according to a statement by the North African nation’s Oil Minister Tareq el-Molla on Tuesday.

The contract corresponding to the verbal agreement is due to be signed in the coming days, el-Molla said at a press conference in Cairo. The first shipment will arrive at an unspecified Egyptian port by May 1st, with the cycle repeating every 30 days.

“This step is very good as it’s the first cooperation with Iraq in the direct import of crude oil,” the minister said, adding that the contract will strengthen economic relations between the Egyptian Petroleum Authority and the Iraqi Petroleum Company. El-Molla began negotiating the deal with Baghdad during his visit to the Iraqi capital last October.

Cairo is in the process of securing new sources of energy after a hiatus from a 700,000-ton oil products contract with Saudi Arabia – allegedly caused by vague “commercial conditions” according to Saudi Aramco – shocked fuel supply in Egypt in the recent past.

Cairo is now in the process of securing new sources of energy after a six-month hiatus from a 700,000-tons-per month oil products contract with Saudi Arabia recently disrupted fuel availability in Egypt.

In March, the KSA shipped four cargoes of oil products to Egyptian ports, marking the reinstatement of Aramco’s contract with Cairo from last year.

Saudi Arabia has been a major donor to Egypt since President Abdel Fattah al-Sisi seized power in a violent countercoup in mid-2013, but Riyadh has become frustrated with Sisi’s lack of economic reforms and his reluctance to be drawn into the conflict in Yemen.

Both sides deny claims that geopolitical tensions led to the disruption in oil shipments, though the two nations have been at odds regarding Syria and other issues in the recent past.

Iraq needs oil and gas revenues to keep its government afloat as it battles the Islamic State in Mosul and rebuilds from 1.5 decades of domestic strife.

By Zainab Calcuttawala for Oilprice.com

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