Ukraine’s sanctions against Russia’s largest oil exporter, Lukoil, have not affected the stability of the EU’s energy market, though Hungary has lost the opportunity to purchase Russian oil at prices below market value, reports Politico.
Hungary and Slovakia, with close ties to the Russian oil importer, reported energy shortages and called for EU intervention.
Hungary has benefited from special EU exemptions for the past two years, granting it access to Russian oil at significantly lower prices. In June, Ukraine disrupted this arrangement by blocking Lukoil’s oil deliveries through its territory to the EU.
According to energy research by Argus Media, Hungary and Slovakia received 720,000 tons of crude oil in August, 792,000 tons in July, and 610,000 tons in June.
However, Ukraine’s sanctions against Lukoil have not complicated the EU’s energy security. Hungary’s difficulties stem from delays in diversifying oil supply sources.
Although Lukoil’s operations were blocked, other Russian oil producers continued transporting oil through Ukraine. Additionally, the Russian company could still sell oil to European consumers at Ukraine’s border.
Croatia could provide alternative routes for pipeline transportation of Russian oil, but this increased costs for Hungary and posed challenges for its government, which used Russian oil discounts to boost profits and control domestic fuel prices.
Politico notes that Russian oil discounts allowed Hungary to maintain the lowest fuel prices in Europe while energy prices surged across the continent. Hungary also sold surplus oil on external markets, a critical factor for Viktor Orbán’s government in balancing the national budget.
In July 2024, Ukraine banned the transit of Lukoil’s resources through its territory. Following this, Slovakia and Hungary reported they had stopped receiving Lukoil oil and accused Ukraine of undermining the EU’s energy security, according to Ukrinform.
EU Commission officials, however, have repeatedly stated that they see no threat to the stability of the EU energy market from Ukraine’s sanctions against Lukoil.
Related:
- June sees 4-month low in Russian oil export earnings
- Oil depot in Russia’s Belgorod Oblast latest target in Ukrainian drone campaign
- Ukrainian drones hit Russia’s Morozovsk airfield, oil depot in Rostov Oblast (video)
- European Commission stalls on Hungary-Slovakia request over Ukraine’s Lukoil sanctions
- Hungary, Slovakia’s request for EU talks on Ukraine’s Lukoil transit ban turned down
- Sanctioned Russian billionaires continue to profit despite restrictions
