Iraq has agreed to supply Egypt with 4 million barrels of oil a month, during a visit by Egyptian prime minister Hesham Kandil to Baghdad on Monday, Iraqi government spokesman Ali Mussawi said on Tuesday.
Economic turmoil since a popular uprising unseated Hosni Mubarak last year has stretched Egypt's finances and inflated the premiums the state petroleum company pays for fuel.
Traders say the number of firms supplying fuel to the Arab world's most populous country has shrunk and repeated shortages have angered motorists and disrupted industry and agriculture.
"An agreement has been reached for Iraq to sell crude oil to Egypt with an amount of 4 million barrels per month," Mr Mousawi said, adding Baghdad would study a request to extend a planned oil pipeline from Iraq to Jordan on to Egypt.
The Egyptian government is under pressure to rein in a deficit enlarged by energy subsidies that account for a fifth of the budget. The government must curb the subsidies to secure a vital US$4.8 billion International Monetary Fund loan, economists say.
A statement posted on Iraqi prime minister Nouri Al Maliki's website on Monday, said the talks aimed "to develop relations between the two brotherly countries... especially in such areas as economic development, trade, oil, energy and investment".
* Reuters
