Hungary fuel price cap hinges on smooth Russian oil shipments, government says

An employee looks on at Hungarian MOL Group's Danube Refinery in Szazhalombatta, Hungary, May 18, 2022. Picture taken May 18, 2022. REUTERS/Bernadett Szabo

BUDAPEST, Nov 28 (Reuters) - Hungary can only maintain a fuel price cap beyond Jan. 1 if oil shipments from Russia flow without interruption and oil and gas group MOL's refinery in Szazhalombatta operates continuously, the government said on Monday.

Prime Minister Viktor Orban's government introduced the fuel price cap in November 2021 to shield Hungarian consumers from surging inflation but was forced to narrow its scope in July because of supply problems.

"We can only maintain this measure ... if oil shipments from Russia arrive without disruptions and the Szazhalombatta refinery operates continuously," a government spokesman said in an emailed reply to Reuters.

MOL (MOLB.BU) has temporarily curbed fuel deliveries to some retailers this month after oil supplies from Russia via the Druzhba pipeline fell substantially below normal levels.

Oil supply to parts of Central and Eastern Europe via a section of the Druzhba pipeline were suspended temporarily this month after a Russian rocket hit a power station that is close to the Belarus border and provides electricity for a pump station.

Hungarian headline inflation (HUCPIY=ECI) rose to an annual 21.1% in October, from 20.1% in September, boosted by surging food and energy prices.

Reporting by Krisztina Than Editing by Kirsten Donovan and David Goodman

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