Middle Eastern oil and gas prices soar, Europe urges Ukraine to agree to Russian oil transit

Rising oil prices have tested Europe’s patience. The EU is once again pressuring Ukraine to repair and open the damaged oil pipeline to restore Russian crude oil transit.

According to media reports on Wednesday, citing five EU diplomats and officials, the EU is urging Ukraine to allow independent inspections at the damaged “Druzhba” (Friendship) oil pipeline site to facilitate the resumption of oil transit to Hungary and Slovakia.

European Commission President von der Leyen and European Council President Charles Michel recently visited Kyiv and personally requested Ukrainian officials to permit European independent assessments of the pipeline’s damage, but their request was refused.

The “Druzhba” pipeline is a major network transporting Russian crude to Central and Eastern Europe, originating in the Samara region of southwestern Russia, with southern branches passing through Ukraine to the Czech Republic, Slovakia, and Hungary. According to Xinhua reports in January, Ukraine claimed that the pipeline was damaged in Russian attacks, leading to a halt in oil shipments since January 27. However, Hungary and Slovakia rejected Ukraine’s explanation, accusing Ukraine of deliberately delaying the pipeline’s restoration and calling for a fact-finding mission.

Despite protests from Hungary and others, and EU demands, Ukrainian President Zelensky has recently stated that restoring the “Druzhba” pipeline “won’t happen so quickly.”

Meanwhile, energy prices are becoming more volatile, and Europe appears increasingly anxious.

Fuel markets are reacting sharply to Middle East tensions. European benchmark diesel futures surged 34% over two days, settling at $1,009 per ton, with US diesel futures spiking up to 16 intraday. Amid low inventories in Europe and the US, price fluctuations are feeding into transportation costs and inflation expectations.

An EU senior diplomat told the Financial Times: “We can’t determine whether there is damage. It’s not hard to prove — record evidence, show them trying to repair. But they haven’t done that.”

Hungary links aid to Ukraine with pipeline dispute, Zelensky responds

Reports indicate Hungarian Prime Minister Orbán has delayed approving a €90 billion EU aid/loan package to Ukraine over this dispute, proposing to send a joint inspection team with Slovakia. Orbán also claims to have satellite evidence suggesting the pipeline is “not seriously damaged” and has vowed to maintain “countermeasures” until Ukraine restores transit.

The Financial Times notes that satellite images do show pipeline facilities being attacked, but it’s difficult to assess the extent of damage from images alone.

Ukrainian President Zelensky has accused Hungary’s domestic politics. “Now you’re blocking €90 billion… this is money we need to buy weapons and survive,” he said.

Ukraine emphasizes “repair costs and war risks,” discloses damage details

A senior Ukrainian official close to Zelensky refuted claims of “delayed repairs,” stating that Naftogaz technicians have submitted evidence to Europe showing that the Druzhba pipeline was “seriously damaged.”

Naftogaz CEO Sergii Koretskyi described the attack’s aftermath: “Russian forces hit a tank holding 75,000 cubic meters of oil, igniting a fire that burned for 10 days before being extinguished.” He added, “Extensive equipment, power cables, transformers, and leak detection systems for sealing the pipeline were damaged,” and “the attack caused a fire in Europe’s largest oil storage tank, with a diameter as large as a football field.”

Ukrainian officials also pointed to harsher realities: “Why must we repair this pipeline — during war, with no ceasefire — to let Russian oil flow to Russia’s friends?” They argued that restarting transit would require deploying repair crews to potentially dangerous areas and diverting already limited resources.

Risk Warning and Disclaimer

Market risks exist; investments should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should evaluate whether any opinions, views, or conclusions herein are suitable for their circumstances. Investment is at their own risk.