Hungary Scrambles To ‘Circumvent’ US Sanctions On Russian Oil Majors

Via The Cradle

Hungary is seeking to circumvent new US sanctions on Russian oil companies in an effort to avoid disruptions to the country’s energy supplies, Prime Minister Viktor Orban said on Friday.

In press statements, Orban emphasized that banning cheap and reliable oil and gas from Russia would significantly increase the energy bills of the Hungarian people. “We are still fighting. So, we haven’t lost the battle yet. We need serious maneuvers. We need leadership that will defend this. We are being pressured.”

Hungary relies heavily on oil transported through the Druzhba pipeline from Russia through Ukraine and Slovakia. MOL Group, which operates refineries in Hungary and Slovakia, processes 14.2 million tons of Russian crude oil a year.

Orban said he has spoken with MOL Group about the sanctions, which come into effect in November. “We are working on how to circumvent this sanction,” he said in an interview with state radio Kossuth.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed the new sanctions on Russia’s largest oil producers, Rosneft and Lukoil, on Wednesday.

The Treasury said its actions would increase pressure on Russia’s energy sector and degrade the Kremlin’s ability to fight its war against Ukraine. The sanctions drove up oil prices this week and raised questions regarding how Hungary and Slovakia can continue to meet their energy needs.

Until now, the two Eastern European nations have been able to continue Russian oil purchases despite the war by securing exemptions from EU restrictions.

Hungary was scheduled to host a summit between US President Donald Trump and Russian President Vladimir Putin to discuss a peace deal in the Ukraine war, but this effort has appeared put on pause.

Russian Presidential Spokesman Dmitry Peskov told TASS news agency on Friday that the summit would move ahead, though the dates have not been determined. Recent news reports claimed the summit had been canceled.

Following the start of the war between Russia and Ukraine in February 2022, Washington and Brussels sought to cut off Europe from Russian oil and gas, forcing the continent to buy more expensive US-produced liquefied natural gas (LNG).

On Thursday, Reuters reported that Germany is seeking an exemption from US sanctions on Rosneft’s German business, citing a person with direct knowledge of government discussions of the matter.

After the US sanctions were announced, several German banks said sanctions could stop them from dealing with the local energy supplier.

Reuters notes that Rosneft’s German business is controlled by the German government but is Russian-owned. “It is a key supplier, routing and refining oil to petrol pumps and some airports in Europe’s biggest economy,” the agency reported.

Germany’s economy has suffered since the start of the Russia–Ukraine war, in particular after flows of cheap Russian oil ended to Europe’s largest industrial economy after an explosion destroyed the Nord Stream 2 Pipeline in September 2022. The explosion was widely viewed as the result of sabotage by a state actor.