The EU's competitiveness is at risk, energy expert Olivér Hortay tells Hungary Today.Continue reading
Sanctions are increasing the chances of serious supply problems in the European Union, Olivér Hortay, head of energy and climate policy at Hungarian think-tank Századvég, pointed out on Radio Kossuth’s Sunday News program. He also said that prices will probably rise due to the sanctions entering into effect on February 5.
Russian oil has already been banned in the European Union, and in only a few days, the sanctions on Russian oil products will also come into force. The new measure will ban imports of diesel, among other things, which will be a huge problem not only for Russia, but also for the European Union. In Europe, the price of diesel will probably rise, and some analysts are even talking about a smaller shortfall.
Hungary’s oil supply is assured even after February 5, when the new EU sanctions on Russian oil products come into effect, emphasized Olivér Hortay. He explained that this was partly due to Hungary’s exemption from the sanctions on imports of crude oil from Russia by pipeline. On the other hand, together with the countries in the region, it was possible to negotiate that the fuel produced in the refineries in the region that were exempt, could be resold in the same proportion as that of crude oil that was not of Russian origin.
This exemption is of great importance for security of supply because it allows refineries in one country to bail out another in the event of an unforeseen problem, he stressed. At the same time, the expert pointed out that imports are necessary for a sustainable supply of the Hungarian fuel market, and therefore the increase in European fuel prices and refinery margins is expected to spill over to Hungary.
He said that Hungary should not be excluded from the European price movements, but the impact would be less severe, as the country could continue to buy Russian crude oil, which is much cheaper than Brent crude.
In the European Union, it seems that refineries in China, India, and the Middle East will be the main substitutes for Russian sources. However, this means that Europe will be able to source oil products from further afield and at a higher cost, he said. As the expert pointed out,
Chinese and Indian players in the market buy a significant proportion of Russian crude, so the question is, what is the point of the embargo?
The new measures have significantly reduced the EU’s room for maneuver, Hortay said, and have also reduced the ability of member states to deal with unexpected supply problems quickly and at low cost, as supplies have to be sourced from much further afield. Analysis on security of supply shows that the chances of serious supply problems in the EU are increasing, emphasized the expert.
Featured photos via Pixabay and Facebook/Olivér Hortay