Public concern in Egypt is rising over the continuation of the Israeli-American war on Iran, amid fears of economic repercussions and difficult financial burdens that could weigh heavily on Egyptians, who have already endured considerable hardship after more than ten years under the rule of the current president, Abdel Fattah El-Sisi.
Renewed strain is once again hanging over the Egyptian economy, already weakened at its core, as the repercussions of the war continue into their second week. Record increases in oil and gas prices have coincided with a sharp decline in the value of the Egyptian pound against the dollar, disruptions to shipping and trade through the Suez Canal, and a slowdown in tourism, pointing to a costly toll across multiple fronts.
A fragile economy
The Egyptian economy appears increasingly vulnerable to regional and international crises and quickly pays the price for any escalation in the region, particularly if it involves Gulf countries that host millions of Egyptian workers (around 8 million). Their remittances reached a record high, rising by 40.5 percent to approximately $41.5 billion in 2025.
Public concern among Egyptians has grown as the local currency continues to decline, surpassing 52 pounds to the dollar. This means higher costs for imported goods, whether consumed by the public or required by factories as raw materials, intermediate goods, and capital goods. The situation is further compounded by rising shipping costs driven by higher oil prices, as well as increased insurance costs for imported goods.
The ongoing escalation, with Hezbollah in Lebanon joining the war and the possibility of the Houthis in Yemen entering the conflict in support of Iran, threatens to bring tensions back to the Bab el-Mandeb Strait and the Red Sea, which would mean an almost complete halt to international maritime traffic passing through the Suez Canal.
Pressure on the Egyptian pound has also intensified due to the exit of more than $2 billion in “hot money”, several global shipping companies announcing they would avoid passing through the Suez Canal and instead take the Cape of Good Hope route, declining indicators on the Egyptian stock exchange, the withdrawal of foreign investments from government debt instruments, and reduced confidence in making new investments—whether foreign or domestic—while awaiting the outcome and duration of the war, according to economic analyst Mamdouh Al-Wali.
The ongoing escalation, with Hezbollah in Lebanon joining the war and the possibility of the Houthis in Yemen entering the conflict in support of Iran, threatens to bring tensions back to the Bab el-Mandeb Strait and the Red Sea, which would mean an almost complete halt to international maritime traffic passing through the Suez Canal.
During a meeting last Monday with World Bank Group President Ajay Banga, El-Sisi estimated the canal’s losses during the two years of the Israeli war on the Gaza Strip—2024 and 2025—at around $10 billion.
Tourism is also unlikely to fare better as the war spreads to neighbouring countries and the United States calls on its citizens to leave 15 countries in the region, including Egypt, citing “serious security risks”.
Other European countries, including the United Kingdom, France, Germany, and Italy, are also planning to evacuate their citizens from the region. Such measures would deepen Egypt’s tourism crisis if the departure decisions were to include Egypt, despite the country remaining outside direct armed conflict.
Oil shock
As global energy markets are affected, Egypt’s budget will face higher costs for importing oil and natural gas. The price of Brent crude has risen from $64.6 per barrel last month to nearly $120 per barrel at the time of writing, marking the largest daily increase in nearly 40 years.Top of FormBottom of Form
The oil shock represents a painful blow to the Egyptian economy. According to the current 2025–2026 fiscal year budget, the price of oil was set at $75 per barrel, creating a significant gap with current prices. This increases the burden of the state’s energy bill and paves the way for government fuel price increases that will inevitably be reflected in transportation costs and other goods and services.
According to government sources who spoke to Middle East Monitor, the government is expected to raise fuel prices if the war continues for an extended period and the Strait of Hormuz remains closed. The ongoing war has prevented the arrival of gas shipments Egypt had contracted from Qatar, either because Qatari LNG exports were halted following damage to the Ras Laffan area or due to the closure of the Strait of Hormuz. Egypt would therefore turn to purchasing natural gas on the spot market, which is more expensive than gas obtained through prior contracts.
Egyptian Prime Minister Mostafa Madbouly warned a few days ago that the continuation of the war with Iran, and the resulting surge in oil prices, could force his government to reconsider fuel prices.
At the beginning of this month, Israel halted natural gas supplies to Egypt from the Tamar and Leviathan fields in the Mediterranean, cutting flows of up to 1.1 billion cubic feet of gas per day and placing additional pressure on the country’s energy system.
Estimates issued by the US investment bank Morgan Stanley suggest that Egypt’s energy deficit in the state budget could increase by between $400 million and $600 million during the remainder of the 2025–2026 fiscal year if the war ends, rising to $2.4 billion if the escalation continues.
Egyptian Prime Minister Mostafa Madbouly warned a few days ago that the continuation of the war with Iran, and the resulting surge in oil prices, could force his government to reconsider fuel prices.
A few days ago, the Egyptian president said the country was living in a state of “near emergency” due to the current situation in the region, noting that the crisis could have repercussions on prices.
The Egyptian government says it has a large strategic stockpile of essential food commodities sufficient for several months, while emphasizing full readiness to provide the foreign currency needed to secure petroleum products if the war continues. However, the fragility of the economy, the collapse of the local currency’s value, and rising external debt—reaching $163.7 billion by the end of September 2025, according to official data—are likely to place Egyptians under the pressure of a new wave of price increases and could push additional segments of the population into poverty.
Security strains
In addition to the decline in the value of the local currency, the impact on Suez Canal revenues, the drop in tourism activity, the outflow of hot money, and rising oil and gas prices—five issues placing significant pressure on the Egyptian economy—the most populous Arab country is also bracing to bear substantial security costs amid rising geopolitical risks in the region.
Egypt faces a major strategic dilemma if the war continues and Israel succeeds in its objective of reshaping the balance of power in the Middle East. This would impose new security arrangements to address a potential Iranian collapse, the risk of the region fragmenting into renewed chaos, and attempts to curb the expansion of Israeli influence following the weakening of what is known as the “axis of resistance.”
As the war continues, the Horn of Africa could turn into a proxy battleground between Washington and Tehran, expanding the scope of military confrontation and bringing it closer to Egypt. Security and strategic pressures are also expected to intensify if the war ends with Iran’s defeat and a change of regime or its fragmentation, allowing Israel to dominate the region and its resources under the banner of normalization and prosperity. This would pose a deeper and more serious threat to Egyptian security, which already faces mounting challenges on multiple fronts around the country, according to political researcher Hamdi Al-Masri.
Speaking to Middle East Monitor, Al-Masri said Cairo may have anticipated Israeli plans and, amid the fragility of the American security umbrella, called for the formation of a joint Arab force to safeguard its security and that of its regional partners. However, the call did not gain traction for years, and reliance on an American-Israeli security umbrella is expected to increase after the war, further exposing Egyptian national security.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.
