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Russia’s Oil Export Ban Does Not Directly Affect Hungary’s Oil Supply

Mariann Őry 2022.12.28.

Vladimir Putin reacted to the EU oil cap: the Russian president announced an oil export ban. Olivér Hortay, head of energy and climate policy at the Századvég Economic Research Institute told Hungary Today that this will have no immediate short-term impact on Hungary’s oil supply.

Russian President Vladimir Putin signed a decree that bans the supply of crude oil and oil products from February for five months to EU countries that implement the oil price cap, Reuters reports.

The European Union decided to set an oil price cap for crude oil and petroleum oils and oils obtained from bituminous minerals which originate in or are exported from Russia, at USD 60 per barrel on December 5.

Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó said that “measures like these hurt the European economy the most.” “During the negotiations on the oil price cap, we fought a lot for Hungarian interests, and in the end, we succeeded: Hungary was exempted from the oil price cap,” he reminded.

At the moment, if we were to cut oil from Russia out of the Hungarian energy supply, the country’s oil supply would become physically impossible. It is not a matter of taste, it is not a political statement, it is a physical reality. And we do not want Hungary’s energy supply to be jeopardized,

Szijjártó emphasized.

Hungary Exempt from Russian Oil Price Cap
Hungary Exempt from Russian Oil Price Cap

Foreign minister says the country's interests have been defended.Continue reading

Olivér Hortay, head of energy and climate policy at the Századvég Economic Research Institute, spoke to Hungary Today about the possible effects of Putin’s announcement for Hungary.

According to Hortay, the announcement is unlikely to have an immediate impact, as the countries that have adopted the price cap on oil coming by sea are already imposing an embargo on Russia. Energy companies in countries that are involved in global oil shipments could be the main ones affected. Hortay says the announcement will not have an immediate impact because Urals crude oil’s price is currently lower than the 60-dollar cap and the regulation will not come into force until February.

But later on, he said that

Western companies will gradually be forced out of deals involving Russian oil supplies, which is both bad for Europe as a whole as energy companies’ room for maneuver is reduced,

and Russia is expected to cut production, which will tighten global crude supply, which could push oil prices up further. This will also affect the EU’s competitiveness, he noted.

Oliver Hortay pointed out that Hungary has also fought for exemptions from the oil embargo and the oil price cap, and these measures do not apply to oil transported by pipeline. Putin’s announcement will not directly affect Hungary’s supply, but the price increase will affect Hungary negatively, as will the loss of economic competitiveness in the European Union.

Featured photo via Pexels

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