The Hungarian government will be in close coordination with its partners in the region to minimize the price increase.Continue reading
Hungarian oil and gas company MOL has sent a letter to retailers telling them that it is time to rein in fuel prices, which have been rising almost daily this year. As a result, both petrol and diesel prices have fallen by 2 forints per liter, reports Index.
In Hungary, fuel prices have risen so much in the last few weeks that not only the Ministry for National Economy but also the Prime Minister has spoken out on the issue. Viktor Orbán said at the weekend that what was happening at petrol stations was outrageous. According to him, Europe is heading for another energy crisis, and Hungary should stay out of it.
The first month of the year has not even passed, but according to data from fuel price monitoring website Holtankoljak.hu, the average price of both petrol and diesel has risen by almost 30 forints (0.07 euros).
The government’s reactions have seemingly had an effect, as on Tuesday, MOL’s Retail Fuel Pricing team sent an internal circular to retailers in their network, informing them that a price change would take effect from midnight. Though the wholesale price has not changed, the retail price has fallen by 2 forints (0.004 euros) per liter for petrol and diesel, reads the letter obtained by Index.
However, the price situation that has developed is multi-factorial, Világgazdaság reports. The level of the newly introduced excise duty is a given, with a frequent criticism being that the government would have room for maneuver to reduce the high tax on fuel.
One of the main problems is that the geopolitical situation, above all the Israeli-Palestinian conflict, is keeping oil prices high.
“However, the long-term trends point towards a settlement. The price of Brent oil has been around $83 recently, $82 last week and with the latest events it may soon weaken below $80,” the Secretary General of the Hungarian Petroleum Association told Világgazdaság. Based on this, Ottó Grád hopes that there will be no further domestic price increases, and in a favorable case prices could even fall by a few forints soon.
However, it should also be noted that domestic retail prices are also influenced by the exchange rate of the forint.
Although the oil companies are not responsible for this, the domestic oil refiner can obtain oil at a lower price than its competitors with a weak forint. Fortunately, the forint has strengthened against the dollar and the euro in recent days, which could raise hopes of a price fall.
The stability of supplies on the Friendship pipeline is also a key geopolitical risk in our region, given the ongoing war in Ukraine. In an extreme case, if transit on the Friendship were to stop, the pipeline could easily become a military target.
Via Index, Világgazdaság; Featured photo via MOL Group
