Oil supply to Hungary by Russian energy giant Lukoil ceases due to Ukrainian sanctions

Russian energy giant Lukoil has stopped transporting oil to Hungary since the end of June 2024 after Ukraine's National Security and Defence Council (NSDC) extended sanctions against it.

Source: Bloomberg

Details: The tightening of Ukrainian sanctions against Russia's Lukoil at the end of June 2024 blocked the transit of its oil to Hungary.

Lukoil has been under sanctions in Ukraine since 2018, though they were limited, affecting only capital withdrawal, trade restrictions, and bans on involvement in state property privatisation or leasing.

In June 2024, the NSDC significantly expanded them, adding, among other things, a ban on transit.

"There’s now a legal situation in Ukraine based on which Lukoil is not currently delivering to Hungary. Now we’re working on a legal solution," Hungarian Foreign Minister Péter Szijjártó told reporters after a meeting with his Russian counterpart Sergei Lavrov.

Russian supplies currently account for two-thirds of all crude oil supplied to the Hungarian company Mol, but it may be able to completely replace them from 2025.

Background: 

• At least a dozen Russian businessmen received more than RUB 1 trillion (US$11.3 billion) in dividends in 2023 and the first quarter of 2024.
• On the night of 10-11 May, drones operated by Ukraine's Defence Intelligence attacked the Volgograd Oil Refinery in Russia.

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