‘Budapest is furious’: Hungary is losing favorable prices on Russian oil due to Ukrainian sanctions, – Politico

Hungary loses profitable Russian oil contract due to Ukrainian sanctions.

This was reported by Politico.

Hungary had long benefited from favorable prices on Russian oil, but new Ukrainian sanctions are changing the situation, leaving Budapest outraged, according to the publication.

Hungarian Foreign Minister Péter Szijjártó stated that without Russian oil, Hungary would face severe economic challenges.

“We will not be able to feed the country if these supplies are cut off,” Szijjártó said.

However, according to the EU, there is no oil shortage in Europe. The issue is that Hungary will now have to pay higher prices since it will lose the Russian discount, as Politico notes.

Over the past two years, Hungary enjoyed special EU exemptions, allowing it to access Russian oil at prices significantly lower than market rates. In June, Ukraine questioned this arrangement by blocking Russian energy giant Lukoil from sending oil through Ukrainian territory to the EU.

Hungary and Slovakia immediately warned that both countries faced energy shortages and demanded EU intervention.

Despite the sanctions, crude oil continued to flow for several weeks. Data from energy intelligence service Argus Mediashows that in August, Hungary and Slovakia received 720,000 tons of crude oil, compared to 792,000 in July and 610,000 in June. The European Commission provided similar estimates this week.

There are several reasons why the oil flows remained nearly unchanged. While Lukoil was blocked, other Russian oil producers were not, and they continued sending oil through Ukraine. Additionally, Lukoil might sell its oil at the Ukrainian border to a trader, who then resells it to the EU. If that fails, Croatia has offered its own pipeline as an alternative route.

Nevertheless, Politico notes that all these options will come at a higher cost for Hungary. This could spell trouble for Hungarian Prime Minister Viktor Orbán, who used the discounts to lower domestic fuel prices.

The current agreement with Russia has been “very beneficial for Hungary,” says Ilona Gizińska, a research fellow and Hungary expert at the Center for Eastern Studies.

“Russian oil has been sold cheaper than non-Russian oil, with price differences ranging from $5 to $30 per barrel since sanctions were imposed,” the expert states.