Saudis Halt Egypt Oil Shipments

Saudi Arabia has informed Egypt that shipments of oil products expected under a $23 billion aid deal would be halted indefinitely, suggesting a deepening rift between the Arab world's richest country and its most populous.

Saudi Arabia agreed to provide Egypt with 700,000 tonnes of refined oil products per month for five years in April, during a visit by King Salman.

The cargoes stopped arriving at the start of October, as festering political tensions burst into the open, but Egyptian officials said the contract remained valid and had appeared to hold out hope that oil would start flowing again soon.

Saudi Arabia's state oil firm Aramco has not commented on the halt. But on Monday, Egyptian Oil Minister Tarek El Molla confirmed it had halted the shipments indefinitely.

An oil ministry official told Reuters: "They did not give us a reason. They only informed the authority about halting shipments of petroleum products until further notice."

The move comes as a source in Molla's delegation said late on Sunday evening that he would visit Iran, Saudi Arabia's main political rival, to try to strike new oil deals.

Egypt and Iran's diplomatic relations have been strained since the 1970s. An Egyptian official visiting Iran would cement a break in its alliance with Saudi Arabia and mark a seismic shift in the regional political order.

The oil ministry spokesman declined to confirm or deny whether Molla was scheduled to visit Iran, saying he had gone to Abu Dhabi to attend a conference. Foreign Ministry spokesman Ahmed Abu Zeid said he had no information on the visit.

Speaking to reporters in Abu Dhabi, Molla said he was not going to Iran.

But two security sources and a source in Molla's delegation said the minister had been scheduled to go though the low-key visit was now likely to be delayed after the news became public.

Gulf Arab countries, led by Saudi Arabia, have pumped billions of dollars into Egypt's flagging economy since mid-2013, when general-turned-president Abdel Fattah al-Sisi seized power, ending a year of divisive Muslim Brotherhood rule.

But with the Brotherhood threat diminished, Gulf rulers have grown disillusioned at what they consider Sisi's inability to reform an economy that has become a black hole for aid, and his reluctance to back them on the regional stage.

Egypt has been reluctant to provide military backing for Riyadh's war against the Iranian-backed Houthi group in Yemen.

In Syria, where Saudi Arabia is a leading backer of rebels fighting against Iranian-backed Bashar al-Assad, Sisi has supported Russia's decision to bomb in support of the president.

A deal to hand over two Red Sea islands to Saudi Arabia, made at the same time as the oil aid agreement, has faced legal challenges and is now bogged down in an Egyptian court.

Reporting by Ehab Farouk