Fuel will be Europe’s most expensive in Hungary?

The next phase of sanctions on Russian refined oil products set to take effect in a few days will have a big impact on Europe’s diesel market, a cabinet parliamentary state secretary has warned. József Balogh, an energy market expert, told ATV that the result could be a horrific fuel price rise in Hungary.

“I have a good story. I saw space for four digits on a fuel station two days ago”, József Balogh, an energy market expert, told ATV. He argued that there are fuel station owners in Hungary who think about a drastic price rise on the market. Four digits would mean prices above 1,000 HUF/l (EUR 2.56). However, Mr Balogh believes that such an increase is currently unrealistic. “Prices go down, but nobody sees the future”, he added.

He argued that the government destroyed Hungary’s fuel market with the fuel price cap. He also highlighted that fuel prices are high because of the government’s so-called “Robin Hood tax” on fuel products, which the Orbán administration increased to 41 percent. Moreover, the weakening of the forint also affected the prices in that segment, ATV wrote.

Balogh said the EU would not buy oil from Russia from 5 February but suggested that the community will buy the same relabeled Russian oil from Turkey. That is because the EU has no choice: it lacks 1.5 million barrels of diesel every day.

Read also: Hungarians are flocking abroad to buy fuel

The price of diesel well exceeds the price of petrol in several European regions due to tight supply, Csaba Dömötör said in a video message on Facebook. Diesel has a higher market share in European countries than in other parts of the world, he said, adding that Russia had been Europe’s primary source of diesel imports for decades.

Dömötör cited an article in the Financial Times on the likely impact of the sanctions, namely that they will lead to price increases and possibly shortages. He also cited the article as saying that the jump in oil prices would offset the dip in the price of natural gas seen in recent weeks. This, the FT said, could dash hopes that fuel prices had already peaked.

The paper also said that without Russian imports, Europe would have to compete with regions that are “physically closer to the source” and would have to rely on refineries in India and the Middle East as well as exports from China. “This will hardly be cheaper,” Dömötör said. The state secretary cited the FT as saying that diesel supplies in Europe “face turmoil in the months ahead”.