Hungary’s dependence on Russian oil is problematic, according to analyst – Here’s why
While this issue is not yet fully reflected in the stock price of the Hungarian energy company MOL, Russian oil poses a serious threat, according to an analysis by Erste Bank. The European Commission has also expressed significant concerns over Hungary’s reliance on Russian energy.
Hungary’s dependence on Russian oil
Pénzcentrum reports that Hungary’s Minister of Foreign Affairs, Péter Szijjártó, stated in an interview with Russian TV channel RBK that the country is heavily reliant on Russian oil to maintain its energy supply due to a lack of alternative infrastructure. He warned that current developments could lead to a sharp increase in oil prices. Zsolt Hernádi, CEO of MOL, noted that the eastern transport route remains the most feasible option for Hungary and Slovakia, while transitioning to the Adriatic pipeline would require substantial investment and several years to complete.
Photo: depositphotos.com
European Commission raises concerns
The European Commission has voiced concern over Hungary‘s growing dependence on Russian oil. Imports rose from 58 percent to 77 percent between 2021 and 2023, in stark contrast to the efforts of other EU countries to reduce their reliance on Russian energy.
According to Erste Bank, MOL faces significant external economic challenges. The situation could worsen if Russian oil supplies are disrupted or in case the Hungarian government imposes additional taxes. Such measures could seriously impact the company’s financial outlook and its ability to distribute dividends to shareholders.
The MOL Tower in Budapest. Photo: FB/MOL Campus
Potential blockade of the Friendship pipeline
Tamás Pletser, an oil and gas analyst at Erste Bank, warned that a disruption in oil supplies from Russia could become inevitable due to political or technical reasons, particularly given the ongoing war in Ukraine. He suggested that Ukraine might resort to missile strikes or impose blockades on Russian oil, posing a severe threat to the operation of the Friendship (Druzhba) pipeline, which is crucial to Hungary’s energy supply.
Druzhba pipeline. Photo: Creative Commons CC BY-SA 3.0
Read also:
- Russian oil dispute in Hungary: Market struggles or internal conflicts
- Hungarian MOL reaches agreements securing Druzhba crude deliveries
Featured image: depositphotos.com
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2 Comments
The Real Person!
The Real Person!
Yeah, yeah… We should do what, say, Germany did, and sink countless billions into the “green” wind and solar, which now has millions of Germans shivering in their homes and being reduced to spending their days in communal halls and malls just to warm up. Go fry an egg, E.U. (and Erste, its little hand-puppet).
Reliance on ANY foreign source of energy is a bad idea, not just Russia’s. I’d not trust Croatia any more than I trust Russia. The answer is to pursue cheap and proven energy sources so let’s get to drilling, fracking, mining, nuclear, and hydro!
The Real Person!
The Real Person!
If it hasn’t escaped your attention, ‘green’ energy is largely free once the build costs are accounted for, its widespread use reduces the need to rely on foreign energy sources. There is a sound economic reason why it’s being embraced across the developed world and that’s because it’s not only environmentally friendly, it saves money. Europe doesn’t want to import one-sided US energy policy, thanks. Take one look at the behemoths on US roads doing 10 to the gallon while mowing down schoolchildren on pedestrian crossings and that tells you all you need to know. The US is per capita the highest energy consumer in the world by a country mile, moreover it’s self interested in sustaining the Texan oil industry while keeping citizens spending big to heat and cool their massive and poorly insulated homes.