Analyst estimates possible fuel price increase linked to Druzhba pipeline shutdown

Hungarian energy group Mol announced on Monday that it had approached the Hungarian Ministry of Energy to release strategic oil reserves after no oil has been delivered through the Druzhba pipeline, either to Hungary or Slovakia, since 27 January 2026.

"To make up for the shortfall, Mol has started supplying its refineries with seaborne crude oil. Due to the longer transit times involved in maritime transport, this supply route is being established gradually: the first shipments are expected to arrive at the port of Omišalj in Croatia in early March, from where it will take a further 5-12 days for the crude oil to reach the Mol Group's refineries," the company said.

If shipments from the east do not resume in the coming days, Hungary may need to release approximately 250,000 tonnes of strategic crude oil reserves in the first round.

To this end, Mol has approached the Hungarian Ministry of Energy, initiating the release of strategic crude oil reserves. "In Slovakia, close contact is also being maintained with the Slovak government to ensure that the country can respond quickly to the situation. In both countries, in accordance with European Union regulations,

there are sufficient crude oil reserves for approximately 90 days,

Mol added. It also stressed that

the current situation does not threaten fuel supplies:

"the market is being served without disruption, and Mol continues to operate within the framework of normal business. The company is continuously monitoring developments and will provide information on any significant developments," it concluded.

Tamás Pletser, an energy analyst at Erste, writes that since the outbreak of the intense phase of the Russian-Ukrainian war, the Druzhba pipeline system has been shut down several times, but the situation now seems more serious than before.

The expert recalls that Zsolt Hernádi, the company's Chairman and CEO, had previously indicated that its domestic refineries could operate at 70–80% capacity until early 2027, provided that Russian crude oil was unavailable through the Druzhba pipeline. The company's goal is to complete the necessary developments to break away from Russian crude oil by the end of the first half of 2027. Consequently, both domestic refineries will be able to operate at full capacity, with crude oil arriving by sea via the Janaf system in Croatia. Pletser emphasises that

the Danube Refinery will only be able to achieve 70% capacity utilisation until October 2026 due to the fire on 10 October 2025.

As a result, the AV3 unit is currently undergoing repairs.

It is therefore the Bratislava Refinery that is directly affected by the shutdown of eastern shipments. The company has been forced to reduce capacity utilisation at this refinery from 100% to 70%.

Although Croatia is prepared to assist Hungary and Slovakia with oil supplies, Pletser believes that the Economy Minister's statement was rather vague. It suggested that, while the EU does not prohibit the import of Russian oil to Mol's internal refinery via the Croatian system, Croatia does not support the two EU member states in their purchase of crude oil from Putin's regime.

In other words, it is uncertain whether the Croatians will permit the transit of Russian crude oil through the port of Omišalj and the Adria pipeline system.

Serbia has not been able to transport Russian crude oil through these systems since November 2022.

Following this news, several questions remain unanswered, according to the expert.

1. What type of crude oil will Mol be able to import by sea? Will it be Russian crude oil? How will the Croatian authorities distinguish Russian crude oil from Kazakh crude oil, for example, when the two are completely similar and mixed within the Russian system? According to Pletser, the Croatians will be strict and require Mol to prove the origin of every shipment. Russian crude oil may not arrive via the Adriatic. At the same time, according to EU sanctions and the exemptions granted to Hungary and Slovakia, Croatia must allow Russian oil to pass through. If they do not, they will be in violation of EU regulations. While this does not guarantee that they will allow it to pass, politically it would be costly and difficult for them to do otherwise.
2. What is the price at which Mol can use Janaf's systems? Mol and Janaf have annual contracts, with this year's agreement covering two million tonnes. Clearly, the volume needs to be increased, and the price will depend on how much the Croatians are willing to charge given their dominant position.

   Pletser believes that there will likely be an increase in fees compared to current rates. However, it would not be advisable for the Croatians to raise them too high, as this would seriously damage their international reputation.

   Mol may be able to negotiate a volume discount from the Croatian company by arguing that it will transport 8–10 million tonnes per year instead of 2 million tonnes over the next 12 months. The outcome is therefore uncertain.
3. When will Mol complete the necessary investments for the separation process, including the construction of a mixing plant and storage facilities in Százhalombatta? How much are these investments being hindered by the repair of the AV3 plant? Mol has promised to complete these investments by early 2027, and the current changes may accelerate the process. However, the expert does not believe that Mol will complete this task before 2027.
4. What is the operating capacity of the Adria pipeline system? Given its current configuration, can the Sisak-Virje section — the narrowest bottleneck — provide the required capacity of 40,000 tonnes per day (14 million tonnes per year) for Mol's internal refineries? This is the most difficult question to answer, but we will probably discover the answer in time. According to Mol, Janaf should build a parallel pipeline for the 80-kilometre section in question to provide the requested service reliably.
5. What capacity can Mol's two internal refineries operate at during the interim period if no crude oil is coming from the east? Can Mol handle the increased volume of product imports during this period, and will the recently completed delayed coking investment in Rijeka help with this? The expert believes that Mol will rise to this challenge. However, in terms of logistics and organisation, it is a serious undertaking. Consequently,

   retail fuel prices in Hungary will increase by at least 5% compared to what they would be if there were no supply disruptions on the Druzhba oil pipeline.

6. Finally, will the Druzhba oil pipeline system ever be operational again? Will the significant damage to their own critical infrastructure prevent them from repairing it? Or are there political reasons for this? Pletser is also eager to find out.

   I think it is doubtful that there will be any Ukrainian oil transit until the war is over, but I believe that this connection will be rebuilt afterwards.

Cover photo: Portfolio