No Russian crude oil is currently flowing into Hungary, Czechia and Slovakia

HUNGARY - In Brief 09 Aug 2022 by Istvan Racz

---

We apologise for raising the flag the second time today on something that happened Hungary. Normally, events should be on holiday at this time of the year, but somehow this is not the time for a calm and balanced summer recess. So the thing is that, as reported today, the usually continuous imports of Russian crude oil stopped through the southern section of the Drushba pipeline, the only means through which Hungary currently imports oil, already five days ago, on August 4.  The problem also affects Czechia and Slovakia, which are hooked up to that pipeline as well. The cause of this break is reportedly a 'technical problem' in the financial settlement of the transit fee Russia should pay to Ukraine for the use of the long Ukrainian section of the pipeline. Reports coming in from the two sides are not entirely identical, as usual. Given the overall situation around energy imports from Russia (see the case of Nordstream shipments of natural gas to Germany), the is a fair chance that politics is seriously involved in the case. In similar cases, solving 'technical problems' may prove extremely difficult in these days, we fear. We also fear that our fears are shared by investors as well, and so the event must clearly be forint-negative, the same way as MOL's shares and generally the whole local stock market will likely be adversely affected to an extent. At the macro level, there may be three problems for Hungary: (a) a shortage of incoming crude oil; (b) incompatibility of replacing imports with the local refining technology; and (c) a negative fiscal impact. On (a), foreign minister Szíjjártó was quick to say that no problem, Hungary has reserves of Russian crude for sev...