BUDAPEST, Dec 7 Reuters Hungary39;s government will siphon off nearly all profits earned on cheaper crude oil imported from Russia from Thursday, it said in a decree, a day after Prime Minister Viktor Orban39;s cabinet scrapped a retail fuel price cap amid a shortage of supplies.

Lower crude imports via the Druzhba oil pipeline from Russia, extended maintenance work at oil group MOL39;s Danube refinery and surging fuel demand forced Orban to abandon the yearlong cap just before the start of the holiday season.

Orban, a vocal critic of 39;Brussels bureaucrats39;, blamed the fiasco on EU sanctions on Russian crude. MOL, Hungary39;s main oil and gas group, has said the price cap was unsustainable as major players stopped importing fuel due to low prices, aggravating the shortage.

In the past days, the oil sanctions of Brussels took effect and what we had been afraid of, has actually happened. From now on there are sanctions prices on petrol across entire Europe, Orban said on Facebook, adding his government would redirect 39;extra profits39; earned on higher prices to the state budget.

Late on Wednesday, a government decree showed oil companies would have to pay a 95 special tax rate on the BrentUral spread as of Thursday, up from 40 previously, sharply hiking the existing windfall tax to plug budget holes.

Reelected for a fourth straight term in April, nationalist Orban is facing his toughest economic challenge to date, with inflation running above 20, the economy…