Good morning, all. We have some good news to kick off the issue after yesterday’s surprise fuel price hike — the EGP is strengthening against the greenback, the bourse is up, and we’re hoping we’re on the path to recovery after what has been a volatile March so far.

To balance out the good news, February’s inflation reading came in higher than expected, primarily driven by a jump in food and beverage prices and the road ahead points to further increases, which could put monetary easing on the backburner for now.

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FUEL PRICES — Yesterday’s fuel price hikes are already starting to filter through to the price of goods and services, with the Chambers of Commerce’s Land Transport Division considering hiking prices by 15-20% on the back of the 17.1% jump in diesel prices to EGP 20.50 per liter, a source with knowledge of the matter tells EnterpriseAM.

Your mobile bill may also soon rise as operators push for price adjustments following the fuel price hikes, further adding to the already increasing costs of operating cell towers, a source working at a mobile operator tells us. The proposal is currently under study, with a final decision to raise prices likely next month, a government source in the sector said.

But some goods will remain shielded from potential increases, like subsidized bread purchased with ration cards, which will remain at EGP 0.20 a loaf as the state covers the extra EGP 134 mn in additional expenses from fuel price hikes, Supply Minister Sherif Farouk said. The price of unsubsidized fino bread, however, is expected to rise 20%, with a final decision to be made tomorrow as the Bakeries Division meets, head of the division Abdullah Ghorab tells us.

Prices of subsidized goods at the proper outlets and from cooperatives are likewise set to remain stable, the minister said. Agricultural goods should also see a limited impact, as the use of large-capacity vehicles to transport produce helps distribute the added fuel costs across more units, effectively reducing potential price increases per item, Vegetables and Fruits Division head Hatem El Naguib explained.

The road to recovery?

After days of weakening, the EGP posted gains against the greenback yesterday, with the USD changing hands at EGP 51.94-52.04 at state-owned banks, falling from record highs seen earlier in the week.

The bourse also saw gains, with the EGX30 rising 2.9% yesterday, driven by local institutions.

Interbank activity didn’t reflect the strengthening EGP, with interbank volume surpassing USD 1.3 bn, banking sources told EnterpriseAM. The increase was the result of banks looking to meet higher import demand, amid growing concerns that the continuation of the war could extend shipping times and delay deliveries, in addition to foreign investor outflows.

AND- Checking in on the citizen bonds. The debt instrument brought in EGP 5 bn since its debut late last month, a senior government source told us, adding that this exceeds expectations and reflects a recovery in the local debt market.

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Market watch

Saudi Arabia, the UAE, Iraq, and Kuwait cut production by some 6.7 mn bbl / d — shaving some 6% off global oil supply, Bloomberg reports, citing people it says are familiar with the matter. Saudi trimmed some 2.5 mn bbl / d, Iraq roughly 2.9 mn bbl / d, the UAE 500k-800k bbl / d, and Kuwait about 500k bbl / d. For Saudi Arabia, the UAE, and Kuwait, that translates to roughly 20-25% below February output levels.

The spillover: The crisis is triggering a “severe chain reaction” across shipping, [ins.], aviation, agriculture, and automotive supply chain,” Aramco’s CEO Amin Nasser said, noting that global inventories are already sitting near five-year lows.

Following Monday’s drop, oil prices eased further yesterday after the Wall Street Journal reported that the International Energy Agency is considering releasing more than 182 mn barrels of oil to curb the surge in prices seen since the outbreak of the US-Israel-Iran war. A decision on the motion is anticipated today. The plan requires unanimous approval for immediate adoption, otherwise the process could be stalled.

Prices fell on the news, with Brent futures dropping 0.26% to USD 87.57 / bbl and West Texas Intermediate dipping 0.44% to USD 83.08.

Could this be the second wind we need? Egypt’s status as a net oil importer has made it especially sensitive to the war’s impact on fuel pricing, which makes a stabilizing force very welcome for our economy. Morgan Stanley downgraded the outlook of Egyptian equities due to the economy’s relative vulnerability to oil supply shocks earlier this week.

Data point

22% — that’s how much global air cargo capacity was reduced last week as disruptions from the war mounted, Reuters reported on Thursday, citing aviation-focused consulting firm Aevean. The impact was most severe on the Asia-Middle East-Europe corridor, where capacity has been slashed by 39%.

PSA

WEATHER- The temperature is slowly rising — but still chilly — in Cairo today, with a high of 23°C and a low of 13°C, according to our favorite weather app.

It might drip in Alexandria, with a high of 21°C and a low of 13°C.

The big story abroad

It’s another morning with the front pages all about the US and Israel’s continued campaign against Iran, which saw the most intense night of aerial bombardment on Tuesday. Earlier today, Iran retaliated by launching attacks on central Israel and US military sites in Bahrain.

That said, Washington urged Israel not to launch further strikes on Iranian energy facilities, especially oil infrastructure, three unnamed sources told Axios. The Trump administration reportedly argued that such attacks would harm the Iranian public and jeopardize future US cooperation with Iran’s oil sector post-conflict. Washington also cautioned that these strikes could provoke retaliatory strikes against Gulf allies and their own energy sites.

Meanwhile on Wall Street: Microsoft has cemented its support for Anthropic’s lawsuit against the Pentagon, arguing that moves to punish the AI startup would be detrimental to the broader US tech scene.

*** It’s Hardhat day — your weekly briefing of all things infrastructure in Egypt: EnterpriseAM’s industry vertical focuses each Wednesday on infrastructure, covering everything from energy, water, transportation, and urban development, as well as social infrastructure such as health and education.

In today’s issue: We look at why electrifying commercial fleets is the way to go, taking into account the environmental and fiscal benefits.

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