Europe may see a growth in diesel prices and even its shortage once an EU-wide ban on Russian oil products comes into force on February 5, as the country accounted for 50% of the European Union's needs for the fuel, the Hungarian Energy Ministry said on Saturday
BUDAPEST (Pakistan Point News / Sputnik - 04th February, 2023) Europe may see a growth in diesel prices and even its shortage once an EU-wide ban on Russian oil products comes into force on February 5, as the country accounted for 50% of the European Union's needs for the fuel, the Hungarian Energy Ministry said on Saturday.
Starting Sunday, the EU will prohibit imports of Russian-origin petroleum products used throughout Europe. Meanwhile, the bloc, along with G7 and Australia, instituted on Friday a price cap on Russian oil products, which bars access to various services, including financing and insurance, unless the products are purchased at or below the agreed limits of $100 per barrel for premium-to-crude products (such as diesel and kerosene) and $45 per barrel for discount-to-crude products (such as naphtha).
"In Europe, we can even expect a shortage of diesel and an increase in the price of petroleum products, since half of the EU's diesel demand is still supplied by Russian sources. Due to sanctions, Europe now has to buy products from other, more distant regions, such as importing Indian, middle Eastern or Chinese products, which means it can buy petroleum products much further away and more expensive, which can cause supply insecurity," the ministry said in a statement.
From the outset, Hungary opposed expanding sanctions to include the Russian energy sphere, as most of the oil comes into the country from Russia via the Druzhba pipeline, the ministry noted.
"Full-scale energy sanctions, including those related to nuclear energy and gas import, are also on the agenda in the EU. The Hungarian government is strongly opposed to further broadening the energy sanctions," the ministry said.
On October 7, the European Union introduced its eighth package of sanctions against Moscow which, among other things, set a framework for capping the price of Russian seaborne oil exports at a level coordinated by G7 allies. Some EU countries, including Hungary, were excluded from such measures as they import Russian oil through pipelines.
In late December, Russian President Vladimir Putin signed a decree banning supplies of Russian oil and petroleum products if contracts directly or indirectly provide for a price cap.