US 500% tariff on Russian gas, oil may kill Hungarian MOL’s exceptional profit: brutal price rise on the horizon?

We wrote before about a bipartisan US sanctions package proposal including 500% tariffs on products from countries that import Russian gas, oil and uranium. According to a Hungarian energy expert, the primary targets are India and China, but Hungary can be collateral damage if the package is accepted. Hungarian MOL realised exceptionally high profits thanks to processing cheaper Russian oil and selling products in Western markets, even in the USA. The main question is whether that would mean a drastic price increase in Hungary concerning fuel, energy, etc.

500% tariff does not target Hungary

Szeretlek Magyarország asked Attila Holoda, a well-known Hungarian energy expert, about the possible 500% US tariff. Mr Holoda clarified that the bipartisan proposal signed by 25 Republican and 25 Democrat Senators does not target Hungary but India and China. Furthermore, the main aim of the package is to force Russia to end the war in Ukraine. Therefore, they would make it hard for India and China to sell products in the USA since a 500% tariff would apply to them because both countries have become big buyers of Russian gas, oil and uranium. Holoda said that the two countries entered the place of the EU in that regard after the Russian invasion of Ukraine.

However, the package’s acceptance would harm Hungary’s oil and gas giant MOL significantly. That is because MOL buys only Russian crude oil which they process in Százhalombatta and Bratislava (Pozsony, Slovakia). Meanwhile, MOL sells a large portfolio of products in the Western markets, including the United States.

Hungarian MOL can lose much of its profit

MOL regularly says that the technological switch to process Western crude oil instead of Russian in their refineries would cost approximately EUR 5-600 million. However, that is the amount of money they paid to their shareholders as dividends. If a technological change is inevitable, there will be no dividend, but that money will be invested in that process.