The latest restriction on oil products could have a negative impact on EU energy markets. According to an expert from MOL, this could even cause inflation, but the question is how the Russians will react.
Sanctions against Russia
The EU sanctions on Russia have not had a major impact on the European energy market so far, 24.hu reports. The main reason for the price hikes last year was pressure from Russia.
In December 2022, the European Commission banned imports of Russian offshore crude oil to the EU as the first step of its sixth package of sanctions. But even this has not had a major impact.
However, on 5 February, a new sanction came into force, banning imports of refined petroleum products (petrol, diesel and others) from Russia. This will put an end to Russian oil coming into the EU and being refined here. However, this would have been a serious problem for many countries, so refining was necessary. The EU allows exports within the EU or to third countries on the basis of the mass balance principle. This means that a country can export as much as the proportion of non-Russian oil it processes.
Impact on MOL
So far, MOL has spent USD 170 million to use less Russian oil and more Adriatic oil at the Danube Refinery.
“The company is already able to process 30-35 percent of alternative oil types in Százhalombatta, so it can potentially export 30-35 percent of the finished products produced,” said Ágnes Horváth, chief economist at MOL. MOL has to divest some of the oil maturing on the Friendship pipeline. Slovnaft, the Slovak subsidiary of the Hungarian multinational, is in a difficult situation, having processed only 5 percent of non-Russian oil.
“The risk is that it is still unclear how the Russian side will react if we halve or even reduce our purchases by a third,” Horváth said. The EU has been ordering less and less Russian gas, but pipeline maintenance, transit fees and other extra costs have not fallen significantly.
So Russia can hit back at the EU without losing much in terms of business. Hungary’s strategic stocks provide enough crude oil and fuel for several months. In a worst-case scenario, there could be a diesel shortage in the region, which would dampen economic activity.
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