Diesel and other fuel is delivered to a gas station in Frankfurt, Germany, Friday, Jan. 27, 2023 (AP Photo/Michael Probst)

The Hungarian Energy Ministry said on Saturday that Europe may face an increase in diesel prices in light of the upcoming ban on Russian oil commodities that is expected to come into force on February 5.

Russia used to account for half of the EU's energy needs. Therefore, a bloc-wide ban will most likely trigger a fuel shortage across the continent.

On Friday, the G7 and Australia announced that they have agreed to implement a price cap on Russian fuel shortly after the EU issued a similar announcement.

According to a statement issued by the alliance, they have agreed on two ceiling prices: the first is priced at $100 per barrel for more expensive fuel like diesel and the second at $45 on lower-quality commodities such as fuel oil.

"In Europe, we can even expect a shortage of diesel and an increase in the price of petroleum products, since half of the EU's diesel demand is still supplied by Russian sources. Due to sanctions, Europe now has to buy products from other, more distant regions, such as importing Indian, Middle Eastern or Chinese products, which means it can buy petroleum products much further away and more expensive, which can cause supply insecurity," the ministry said in a statement.

The ministry added that Hungary has from the very beginning opposed sanctions on Russia since most of its oil originates from Russia via the Druzhba pipeline.

From the outset, Hungary opposed expanding sanctions to include the Russian energy sphere, as most of the oil comes into the country from Russia via the Druzhba pipeline, the ministry noted.

"Full-scale energy sanctions, including those related to nuclear energy and gas import, are also on the agenda in the EU. The Hungarian government is strongly opposed to further broadening the energy sanctions," the ministry said.

On Thursday, European Commission President Ursula von der Leyen said that the European Union plans to introduce the 10th package of sanctions against Russia on February 24.

"We will introduce with our G7 partners an additional price cap on Russian petroleum products, and by February 24 — exactly one year since the invasion started — we aim to have the tenth package of sanctions in place," Von der Leyen said.

On the same day, The Economist published a report revealing that the price cap on Russian gas is proving to be a flop for the West as the second round of sanctions on diesel and other refined EU products is due to take effect on February 5th.

Sales of Russian crude have not decreased as the West had hoped, and shipments have dodged European ports and headed to China and India instead.

In a report by The Economist, this moves towards the point of the price cap: to keep Russian crude on the market and thus keep the market stable but to curb its profits through the price.

In turn, this allegedly offers buyers negotiating power, considering that the longer export routes also pose higher freight costs which Russia has to compensate.

Some argue that Russian oil now sells at a 38% discount per price-reporting agencies, which Treasury Secretary Janet Yellen, who helped devise the price cap, sees as a success that the cap is working effectively.