Iran War Pushes Egypt into Crisis Mode as it Slows Down State Projects

Egypt is implementing emergency economic measures to contain a rapidly worsening energy shock, as disruptions linked to the Iran war push fuel costs sharply higher and strain public finances.

Prime Minister Mostafa Madbouly said Egypt will slow large state projects for at least 2 months and cut fuel allocations for government vehicles by 30%. The measures are part of a broader response to rising import costs driven by disruptions in Middle Eastern energy flows.

Petrol import costs have surged from January levels to $2.5 billion in March, more than doubling, reflecting the impact of reduced flows through the Strait of Hormuz, which typically carries around 20% of global oil and gas supply.

Authorities have ordered shops, restaurants and cafes to close by 21:00 for at least 1 month, alongside dimmed street lighting and reduced advertising illumination. Remote work has been introduced for 1 day per week in April across much of the public and private sectors, excluding essential services.

Madbouly said these are “temporary” measures, though he noted they could be extended if the conflict persists.

Egypt’s reliance on imported fuel has amplified the shock. The government has already raised fuel and transport prices to manage costs, while debt servicing - which consumes a large share of the budget - is projected to rise by 5% in the fiscal year starting in July.

Officials said discussions are underway to increase the minimum wage and boost spending on healthcare and education, even as fiscal space tightens.

The crisis reflects broader regional exposure. Ethiopia has also ordered public institutions to reduce fuel use, while African economies face cascading effects from disrupted shipping through Hormuz.

Tourism, which accounts for about 10% of Egypt’s economy, has been partially shielded. Hotels and tourist facilities are exempt from restrictions, though some operators have acquired generators to mitigate potential power cuts.

The near halt in shipping through Hormuz, triggered by Iranian threats to target vessels, has driven global oil prices higher, with knock-on effects for food, transport and essential goods.