Prime Minister Viktor Orbán announced on Monday afternoon that the Hungarian government was reintroducing the fuel price caps. The PM said that at its Monday meeting the government had decided to introduce "protected prices" for petrol and diesel because "unfortunately, as a result of the war in Iran and the Ukrainian oil blockade, Hungary has also been affected by the international fuel price surge. Retailers will not be allowed to exceed the level set by the government.
Prices will be 595 forints for gasoline and 615 forints for diesel.
Orbán also said that state reserves will be released to ensure supply. The protected price, i.e., the price cap will only apply to vehicles with Hungarian license plates and Hungarian registration, and will be applicable to private individuals, agricultural workers, transporters, and entrepreneurs.
The capped prices are valid as of midnight on Monday.
Orbán's announcement was later supplemented by Minister of National Economy Márton Nagy, who said that the government would reduce the excise tax on fuels to the EU minimum level and ban the export of crude oil, 95 octane gasoline, and diesel.
In a video message on Monday morning, Viktor Orbán spoke about the need to prevent diesel and gasoline prices from rising to unbearable levels in Hungary. He had therefore called an extraordinary government meeting for early afternoon. The Prime Minister also said that "all sanctions imposed on Russian energy sources must be reviewed and lifted throughout Europe," and added that he had sent a letter to Ursula Von der Leyen, President of the European Commission on this matter.
The Prime Minister announced the price cap after oil prices began to rise sharply on Monday morning, following increased concerns that the worsening conflict in the Middle East could lead to a prolonged halt in shipments through the Strait of Hormuz. The blockade of the Strait of Hormuz affects at least 20 percent of the world's oil and natural gas supplies, causing global disruption. Key countries in the region, including Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, and Iran, have curtailed or completely halted production at some oil fields because undeliverable crude oil has piled up and their storage facilities are slowly filling up.
The finance ministers of the G7 countries and the head of the International Energy Agency (IEA) called a meeting for Monday to discuss ways of curbing the spike in oil prices caused by the conflict in the Middle East. According to the plans, member states will release their strategic oil reserves, a significant portion of the total 1.2 billion barrels, roughly 300-400 million barrels, to ease the crisis.
Previously, Orbán would have liked to avoid imposing a price cap
Viktor Orbán first hinted at the possibility of imposing a cap on gasoline prices in response to the situation in the Middle East last Friday. "We already did this in 2022, and I would like to avoid it, but if not, then so be it," the PM said in the interview.
Back in February, Minister for National Economy Márton Nagy said that "if necessary, we will intervene immediately in the interest of families," but did not disclose any further details at the time. At last Thursday's government briefing, Minister of the Prime Minister's Office Gergely Gulyás said that the government was not considering introducing a gasoline price cap because it had an agreement with MOL that Hungarian crude oil prices could not be higher than the average price in neighboring countries.
The Hungarian fuel market has a relatively high import need to begin with, with imports accounting for about 30 percent of the diesel market even under normal circumstances, while we are largely self-sufficient in the gasoline market. In order for imports to be continuous, prices need to be in line with market prices, otherwise wholesalers will not bring diesel here. Previously, when there was a price cap in Hungary, many resorted to panic buying, which led to shortages. This was because imports stopped completely (market players were not trading so as not to make losses), while retail demand became even greater, because international freight carriers ended up coming this way, for example, or motorists living near the border came over to buy fuel.
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