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Hungary secures US sanctions exemption but faces costly energy trade-offs
Hungarian Prime Minister Viktor Orbán returned from Washington with a one-year exemption from US sanctions on Russian oil, gas, and nuclear supplies-a critical win ahead of Hungary's April 2026 elections. Yet behind the diplomatic fanfare lies a high-price energy deal with the US and unresolved tensions over Ukraine, analysts say.
Sanctions relief: a temporary reprieve
The US exemption, confirmed by a White House official, applies for one year, though Hungarian Foreign Minister Péter Szijjártó claimed it was indefinite. The timeline aligns with both Donald Trump's electoral support for Orbán and the EU's 2027 deadline for member states to phase out Russian energy imports-a target Hungary has yet to formally commit to, unlike the Czech Republic.
Hungary and Slovakia have paid Russia $13 billion for oil since its 2022 invasion of Ukraine, per BBC calculations. The US waiver spares Hungarian households from potential triple-digit utility bill hikes this winter, Orbán told pro-government media, preserving a key pillar of his domestic popularity since 2013.
Energy diversification-or new dependencies?
While Orbán argued Hungary's landlocked status leaves it no alternative to Russian oil, state-owned energy firm MOL revealed Friday that 80% of its oil needs could now be met via Croatia's Adria pipeline-albeit at higher costs. MOL has also upgraded refineries in Százhalombatta (Hungary) and Bratislava (Slovakia) to process non-Russian Brent crude, undercutting Orbán's claim.
The US deal permits Hungary to continue purchasing Russian gas via the TurkStream pipeline, exploiting a Bulgarian payment loophole. In exchange, Hungary committed to buying $600 million in US liquefied natural gas (LNG), per Bloomberg, and up to 10 small modular nuclear reactors-a $10-20 billion investment to power Chinese battery plants under construction.
Nuclear concessions and financial safeguards
Hungary will purchase $114 million in US nuclear fuel rods for its Paks 1 power station, alongside existing Russian and French suppliers. The US also lifted nuclear sanctions, potentially reviving the stalled Paks 2 expansion-a Rosatom-led project mired in delays. Additionally, Hungary agreed to spend $100-200 million on US technology for spent fuel storage.
A proposed currency swap agreement, mirroring a recent US-Argentina deal, would allow the Federal Reserve to inject dollars into Hungary's central bank during financial crises, bolstering Budapest's stability.
Unmet demands and geopolitical limits
Orbán failed to restore the US-Hungary dual taxation system, scrapped in 2022, which had facilitated bilateral trade. Nor did he secure a date for a Trump-Putin summit in Budapest, a gambit to position Hungary as a peace broker in the Ukraine war-a conflict that continues to strain Hungary's economy and regional standing.
Critics argue the deal merely swaps Russian dependence for US leverage. Orbán's government counters that it has diversified supply chains, though the financial burden-billions in new energy contracts-may test that claim.
"Supplies have stabilized, but conservation remains essential."
Hungarian government statement to pro-Orbán media, November 2025
