Bulgaria Weighs Russian Refinery Buyout as Hormuz Squeeze Hits European Fuel

Oil markets had already been nervous before the politics of Russian ownership returned to the front of the queue. Brent crude climbed to $114 a barrel in early May, its highest level since 2022, after fighting around the Strait of Hormuz restricted roughly a fifth of global oil supply (CNBC, IEA). It has since eased to about $106-108, helped by fragile US-Iran diplomacy (Euronews).

For most European governments, dearer oil means pressure on households, hauliers and inflation forecasts. For the EU countries that still have Russian refinery ownership buried inside their fuel systems, it has exposed something more awkward. Four years after Russia's full-scale invasion of Ukraine, Europe still has no common answer for what to do with these assets.

The Bulgarian bet

Bulgaria is the hardest case to ignore. The Lukoil refinery at Burgas, bought by the Russian company in 1999, supplies about 80-90% of the country's fuel market (Novinite). When US sanctions hit Lukoil in late 2025, Sofia moved quickly, passing emergency legislation to put the refinery under a state-appointed manager (The Moscow Times).

That manager, Rumen Spetsov, has now gone further. On 17 May, he proposed that the Bulgarian state buy the Burgas refinery outright, describing it as a "historic opportunity."

The opportunity comes with a bill attached. The purchase price has not been set, but the legal exposure is already clear. Lukoil's Swiss trading arm, Litasco, has filed an arbitration claim for about €3 billion against Bulgaria, arguing that the state takeover amounts to expropriation (Dnes.bg). That case follows Bulgaria whatever happens next.

Consumers are already paying in the meantime. Petrol prices rose 20% in two months, from €1.25 to €1.50 per litre (Sofia Globe). The Hormuz shock explains part of the increase. But a near-monopoly supplier with no real domestic rival has little incentive to carry costs itself.

Four models, no coordination

Each EU member state with a Russian-owned refinery has had to find its own way out. The result is a set of national fixes rather than a European strategy.

Italy has come closest to completing the job. The ISAB refinery at Priolo in Sicily, Europe's largest single-site refinery, moved from Lukoil to a Cypriot-registered fund, GOI Energy, in 2023, and then to the Italian firm Ludoil in May 2026. Rome used its Golden Power law, which allows the government to intervene in deals involving strategic sectors, to steer the sale without formally nationalising the asset.

That did not make the transition painless. Moving away from Russian Urals crude to suppliers across 20 countries contributed to €333 million in losses in 2024. Lukoil is also pursuing €150 million in damages through the Italian courts.

Germany has chosen control without ownership. Rosneft's majority stake in the PCK Schwedt refinery, which supplies about 90% of Berlin's fuel, has been under federal trusteeship since 2022. In February 2026, Berlin shifted the legal basis to the Foreign Trade Act, making the arrangement open-ended.

Economy Minister Katherina Reiche has rejected nationalisation, arguing that it would deter private investors from the energy sector. Yet Schwedt remains exposed. When Russia cut Kazakh oil transit through the Druzhba pipeline on 1 May, the refinery's capacity fell to 80%, the level below which operations become unprofitable. Rosneft is still the formal owner. Berlin is still responsible for keeping the refinery functioning. Nobody has a clean exit.

Romania has opted for a lighter form of control. Petrotel-Lukoil in Ploiești was placed under "extended state supervision" in February 2026. Ownership remains in place, but the government controls operations.

Bucharest also declared a fuel market crisis, capping commercial margins and cutting diesel excise by 30 bani per litre through June. It is managing the immediate consumer shock while leaving the ownership question largely unresolved.

Hungary has moved in the other direction. Its dependence on Russian oil rose from 65% to 90% between 2022 and 2025. When the Druzhba pipeline was disrupted in January, Hungary drew down strategic reserves so quickly that stockpile cover fell from 91 days to 44 in a single month.

The new Magyar Péter government, elected on a promise to reduce Russian ties, now aims for full diversification by 2035. That is eight years after the EU's own 2027 target.

Who pays for the absence of a plan

The gap in the European system is now plain. EU sanctions say what member states cannot import. They do not say how governments should handle Russian ownership of refineries that sit inside national fuel systems.

The EU's 20th sanctions package in April 2026 targeted Russian energy revenues and the shadow fleet, but it did not create a common mechanism for divestment. That leaves each government to carry the legal risk, financial cost and political fallout by itself. It also allows Russia to apply pressure country by country, as the Druzhba cutoff showed.

An oil crisis centred on the Strait of Hormuz, far from the Russia-Ukraine war that first triggered the push to unwind Russian energy ties, may force Brussels to confront the missing piece. The ECFR has proposed using American sanctions as leverage for European decisions. That recommendation says as much about the EU's institutional weakness as it does about Washington's reach.

Europe has spent four years treating Russian refinery ownership as a set of national complications. Bulgaria is now considering a state purchase. Italy has engineered a sale. Germany is stuck in trusteeship. Romania is supervising operations. Hungary is still buying time. The Hormuz shock has not created these vulnerabilities. It has made them more expensive to pretend away.