State-owned Saudi Aramco has halted all oil shipments to Egypt indefinitely.
Egyptian Oil Minister Tarek El Molla told Bloomberg that Saudi Aramco told Egyptian officials in October has suspended all refined oil shipments to Egypt indefinitely.
The suspension comes just about seven months after Saudi Aramco signed an agreement to provide Egypt with 700,000 metric tons of refined products every month for five years.
The deal, signed in April, was valued at about $23 billion, according to Bloomberg.
According to Reuters, production shipments to Egypt stopped arriving in October.
Saudi Aramco has not commented on the matter.
An official with Egypt’s oil ministry told Reuters that Saudi Aramco has not given a reason for halting the shipments.
Egyptian officials refuted media reports that Molla was preparing to visit Iran, a political rival of Saudi Arabia, to sign new oil deals, Reuters said.
“This leaves Egypt in a very difficult position — the pound flotation means the government will have to pay much more for its imports, and now it has to go to the international markets to secure its gasoil and diesel supplies on much more difficult payment terms,” KBC Energy Economics oil-market analyst Ehsan Ul-Haq told Bloomberg.
According to the U.S. Energy Information Administration, Egypt is the largest non-OPEC oil producer in Africa and the second-largest dry natural gas producer in Africa.
While Egypt has the largest oil refining capacity in Africa its refining sector operators well-below capacity.
According to the EIA, Egypt’s refining output declined 28 percent from 2009 to 2013.
Egypt imported about 145,000 barrels per day of petroleum products in 2014, according to Global Trade Information Services data seen by the EIA.
Declining refining output forces Egypt to import petroleum products to make up for the shortfall.