Hungary's Gov't Cancels National Gasoline,Diesel Price Cap Over Delivery Issues - Budapest

BUDAPEST (UrduPoint News / Sputnik - 07th December, 2022) The Hungarian government has decided to cancel the price cap on gasoline and diesel fuel after receiving a letter from Hungarian oil and gas company MOL about issues with fuel deliveries to the country, Gergely Gulyas, the head of the Hungarian prime minister's office, said on Tuesday.

MOL said on Tuesday that Hungary was in a critical fuel supply situation. The Independent petrol Stations Association said earlier that MOL would not supply gasoline and diesel fuel to some gas stations for the third week in a row due to issues with supplies.

"On Monday, a ban on Russian oil and related sanction of the European Union went into effect. Hungary had been fighting successfully but in vain. We managed to get an exemption but what followed was what we feared. The sanctions' entry into effect... is causing issues with Hungary's fuel supply. MOL told the energy minister in the letter yesterday that, without fuel imports, it is impossible to solve the issue of supplying the country," Gulyas told an extraordinary government briefing.

He added that the Brussels' sanctions resulted in Budapest being incapable of supplying "Hungarian families with gasoline at a price of 480 forints ($1.22) at the country's gas stations.

"Therefore, two days after the sanctions went into force, the government, accepting MOL's proposal, is canceling the price cap on gasoline," the official said.

MOL CEO Zsolt Hernadi told the briefing that from 11 p.m. on December 6 (22:00 GMT), all residents would only be able to refuel their vehicles at market prices, which are 641 forints per liter of gasoline and 699 forints per of liter diesel fuel.

In November 2021, the Hungarian government froze prices of gasoline and diesel fuel at 480 forints per liter for three months.

The government had been extending the measure since. Since May 27, only vehicles with Hungarian registration plates were allowed to fill their tanks at a reduced price, prompting accusations of discrimination by the European Commission. Since July 30, only private motorized vehicles, farming equipment, and taxis with Hungarian license plates were allowed to buy gas at a discounted price. In September, the government extended the measure until December 31.

Last week, the EU reached an agreement on setting a price cap on Russian oil at $60 per barrel, which went into effect on Monday. The cap will be reviewed every two months to remain at 5% below International Energy Agency benchmark. The G7 nations and Australia also agreed same day to set a $60 price ceiling on oil from Russia.

Western countries have been seeking ways to limit Russia's income from oil and gas exports since the country launched a military operation in Ukraine on February 24. In September, the G7 finance ministers confirmed their intention to impose a price cap on Russian oil and urged all nations to support the initiative. In October, the EU introduced its eighth package of sanctions against Moscow, which included a legislative basis for setting a price cap for maritime shipments of Russian oil to third countries.

On Sunday, the OPEC+ alliance decided to maintain the current quotas for oil production. Russian Deputy Prime Minister Alexander Novak, commenting on the upcoming embargo, said that Russia would not accept the price cap, even if the measure forces it to cut oil production. According to Novak, such restrictions are interference in market forces.