Budapest (Reuters) – Hungary is set to engage in discussions with regional partners to address the repercussions of elevated oil prices stemming from the latest round of U.S. sanctions targeting Russia’s oil and gas sector, Hungarian Foreign Minister Peter Szijjarto announced on Sunday.
The administration of U.S. President Joe Biden imposed its most comprehensive set of sanctions to date on Friday, directly aimed at Russia’s oil and gas revenues. The sanctions were enacted with the aim of providing leverage to Kyiv and the incoming team of Donald Trump to facilitate negotiations for peace in Ukraine. Following the news of the sanctions, oil prices surged to a three-month peak.
As part of the sanctions, the U.S. Treasury targeted Russian companies Gazprom Neft and Surgutneftegas, both involved in the exploration, production, and sale of oil, as well as 183 vessels engaged in the transportation of Russian oil.
“This set of sanctions presents significant challenges once again for central Europe,” Szijjarto conveyed in a video posted on Facebook. He expressed concerns that reduced crude oil supplies could lead to heightened demand for refined fuels like petrol and diesel, thereby increasing the risk of substantial price hikes in the region.
Hungary predominantly imports its crude oil through the Druzhba pipeline, which carries Russian crude oil through Belarus and Ukraine to Hungary and Slovakia. Hungarian energy conglomerate MOL did not provide an immediate response to inquiries sent via email.
Szijjarto detailed Hungary’s intention to initiate discussions with neighboring allies to alleviate the impact on prices and the broader economy, without specifying the parties Hungary intends to engage with.
In the backdrop of escalating energy expenses and fluctuations in the forint amidst the looming threat of U.S. tariffs on Europe following Trump’s potential re-election, Hungary witnessed a surge in its industrial producer price index to its highest level in 19 months in November.
The forint has been trading close to two-year lows against the euro, heightening concerns of heightened inflation subsequent to substantial declines from levels exceeding 25% in the first quarter of 2023, which were the highest within the European Union.
Economists surveyed by Reuters anticipate inflation in December to climb to 4.4%, surpassing the target range set by the National Bank of Hungary. The central bank had to halt its rate-cutting cycle last year due to currency depreciation and a resurgence in prices.
(Reporting by Gergely Szakacs; editing by Giles Elgood)
