Hungary government to discuss fuel prices again despite recent falls, minister says

FILE PHOTO: Cars at an OMV petrol station near the Slovakian border in Esztergom, Hungary, June 13, 2022. REUTERS/Bernadett Szabo/File Photo

BUDAPEST (Reuters) – Hungarian Prime Minister Viktor Orban’s cabinet will discuss fuel prices again on Wednesday despite a recent fall in prices driven by government pressure on traders to align prices with levels elsewhere in the region, the economy minister said.

Orban’s government scrapped a fuel price cap in December 2022 after a lack of imports and panic buying led to shortages, but earlier this year raised the possibility of another intervention if fuel prices exceed the central European average.

Shares in Hungarian energy group MOL have fallen about 1% since the government first floated the idea of a fuel market intervention last month, underperforming the Budapest benchmark index, which scaled record highs this week.

MOL Chief Executive Zsolt Hernadi has said he was concerned that state intervention would affect the company’s plans, echoing worries expressed by German investors about growing government intervention in a survey last month.

Orban’s government, which presided over the worst inflationary surge in the European Union last year, gave fuel traders two weeks in mid-April to cut prices to the central European average or face government intervention.

“We have substantially lowered diesel and petrol prices in both the wholesale and the retail segment,” website index.hu cited Economy Minister Marton Nagy as saying on Tuesday.

“But the government will discuss the issue again on Wednesday,” Nagy was quoted as saying, adding that Orban’s cabinet sought to wrestle down fuel prices in a bid to ease caution among households burned by last year’s inflation surge.

“We will protect the population with all our might from high wartime fuel prices,” said Nagy, who will hold a news conference on government decisions on fuel prices on Wednesday, business website portfolio.hu reported, citing an invitation to the event.

Fuel price margins had widened since Hungary’s price cap was abandoned, the central bank said last month, exceeding not just their previous levels but also average levels seen elsewhere in central Europe.

Deputy Governor Barnabas Virag said he believed any intervention that “moves the market towards a lasting and sustainable decrease in these margins, setting fuel prices on a lasting and sustainable lower path” was justified.

(Reporting by Anita Komuves and Gergely Szakacs, editing by Deepa Babington)