As military developments accelerate in Iran and across the region, Egyptians are watching with growing concern—fearing that the repercussions could reach their pockets before anything else. Every regional escalation carries significant implications for prices and the Egyptian economy.
The U.S.–Israeli strikes on Iran, followed by Iranian responses targeting countries in the Gulf, Jordan, and Iraq, have pushed the region to the brink of a more turbulent phase and opened the door to scenarios of open-ended escalation. This comes at a time when Egypt’s economy has not fully recovered from the fallout of the October 7, 2023, events, which disrupted supply chains and affected shipping and trade flows.
Egyptian President Abdel Fattah el-Sisi said on Monday that the repercussions of the conflict spare no one. During his meeting with World Bank Group President Ajay Banga, he revealed that declining shipping traffic had cost the Suez Canal approximately $10 billion in losses, further intensifying pressure on the country’s foreign currency resources.
Last Sunday, Sisi stressed that “closing the Strait of Hormuz would affect oil flows and prices, and the Egyptian state and government must study all possible scenarios.”
Experts also warn that any potential closure of the Strait of Hormuz could ignite global energy prices and disrupt oil flows, with direct repercussions for the Red Sea and the Suez Canal—one of Egypt’s most important sources of foreign currency.
Halt of Israeli Gas Supplies
Israel has suspended natural gas supplies to Egypt from the Tamar and Leviathan fields in the eastern Mediterranean, halting flows estimated at approximately 1.1 billion cubic feet per day.
Despite this development, the Egyptian government moved quickly to reassure markets, confirming that domestic supplies would not be affected. It explained that regasification vessels operating since last year have been injecting around 2.75 billion cubic feet per day, allowing for additional LNG cargoes to support domestic production and bridge any potential gap.
The Ministry of Petroleum and Mineral Resources announced a plan to add about 20 new LNG cargoes starting in March 2026, providing more than 2 billion cubic feet per day in a move aimed at stabilizing the market and securing demand.
Israeli gas imports had reached approximately 1.05 billion cubic feet per day in February. Egypt’s daily consumption stands at roughly 6.2 billion cubic feet, compared to domestic production of about 4.2 billion cubic feet per day—highlighting the importance of rapidly securing alternatives to compensate for any supply shortfall.
Energy Bottlenecks
Member of Parliament and economic expert Dr. Mohamed Fouad believes Egypt is facing a new external shock—this time stemming from disruptions in regional gas supplies—placing direct pressure on the energy balance and current account, at a time when the economy is still dealing with previous shocks related to supply chains and rising global financing costs.
Fouad explained that “markets have seen higher sovereign risk insurance costs and a widening gap between the spot price of the pound and its forward pricing.” However, he noted that movements remain within hedging ranges, without widespread loss of confidence, alongside limited portfolio outflows.
Globally, volatility indicators have risen “but have not reached panic levels, and emerging market debt indicators issued by JPMorgan Chase have not shown mass withdrawals,” Fouad added.
Experts say Egypt’s ability to contain the “shock” will depend on how quickly it secures alternative energy supplies, maintains exchange rate stability, and continues coordination with international partners to ensure adequate financing flows.
The Suez Canal
Meanwhile, Suez Canal revenues remain highly sensitive to any regional escalation. The expansion of military and security developments threatens foreign currency inflows at a time when Egypt relies heavily on the canal as a primary hard currency source.
Captain Amr Qataya, a maritime transport expert, warned of direct impacts on shipping traffic, explaining that global shipping lines have already begun reassessing their routes, with a noticeable decline in oil and gas tanker transits—signaling broader disruption to maritime supply chains. He added that declining revenues from the Suez Canal and Red Sea ports compound pressure on the local economy, alongside risks of shortages in certain petroleum products and rising shipping and insurance costs, which could jump by up to 50% during peak periods.
The figures reflect the scale of the impact. Suez Canal revenues reached approximately $10.2 billion in 2023 before falling to around $4 billion in 2024—a decline of nearly 61% due to regional tensions, according to Canal Authority Chairman Lt. Gen. Osama Rabie. In 2025, revenues rose slightly to about $4.1 billion but remained below pre-crisis levels.
Following the ceasefire in the Gaza Strip after the “peace agreement” took effect in January 2025, projections had pointed to revenues recovering to nearly $10 billion in 2026. However, any new escalation could shatter those hopes and renew pressure on one of Egypt’s most vital economic arteries.
Tourism and Exceptional Measures
Egypt’s tourism sector performed strongly in 2025, welcoming around 19 million tourists—a 21% growth rate compared to 2024. However, the “Iran war” has raised concerns about sustaining this performance.
Prime Minister Mostafa Madbouly confirmed Monday that the continuation of the war may force the state to take exceptional measures to control prices and ensure the availability of essential goods.
The government also announced an emergency plan to address the repercussions of the “Iran war,” including securing foreign currency. The latest report from the Central Bank of Egypt stated that net foreign reserves reached more than $51 billion last December.
These developments risk deepening inflation across the Middle East and globally, with additional pressure on energy and international markets, potential short-term effects on tourism, and possible limited disruptions to energy-intensive industries if gas supply interruptions persist.
Mohamed Abdel Aal, a member of the Egyptian Gulf Bank and banking expert, believes the Egyptian market faces two possible paths: limited stability with intermittent volatility, or comprehensive escalation that could pressure the pound due to hot money outflows toward safe havens. He added that “strong foreign reserves and exchange rate flexibility help absorb the shock, while the Monetary Policy Committee may be forced to raise interest rates if inflation worsens due to higher shipping and fuel costs.”
Between energy pressures, declining shipping revenues, and market concerns, the key determinants of Egypt’s economic trajectory in the coming period will be time, the scale of escalation, and the government’s response measures.
The article is a translation of the Arabic.
