No Oil Shortage Expected in Hungary Despite Ukraine's Block on Lukoil

Hungary will not experience oil shortages despite Ukraine's decision to block the transit of Lukoil crude, according to Zsolt Hernadi, CEO of refiner Mol Nyrt.

Hernadi, speaking at a conference recorded by the Budapest-based company on Monday, reassured that there is no need to panic and that this situation is unlikely to cause an actual shortage, reports Bloomberg.

This view contrasts with statements from Prime Minister Viktor Orban’s government and Slovakia, which have urged the European Union to address the issue. The EU has dismissed these concerns, stating that Ukraine's tougher sanctions on the Russian producer will not disrupt transit operations for companies using the Druzhba pipeline.

Hernadi noted that Hungary has 90 days' worth of strategic reserves and can also import Russian crude through Croatia. He emphasized that having multiple options for crude imports benefits the country.

Previously, Hungary has been hesitant to diversify its oil sources, claiming that importing from alternatives like Croatia would significantly increase costs.

Hungary and Slovakia were granted exemptions from the Europe-wide ban on Russian oil imports following Russia's full-scale invasion of Ukraine. However, Kyiv recently ordered the suspension of the transit of Lukoil’s oil products via the Druzhba pipeline.

Ukraine insists that the pipeline continues to transport the same amount of oil as before, thanks to other Russian companies. Hungary and Slovakia, on the other hand, argue that Kyiv’s decision threatens their energy security.