MOL, which owns the largest network of service stations in the country, has called for phasing out a government-imposed price cap that set the retail price for both 95-octane gasoline and diesel at 480 forints ($1.27) a litre.

The cap, in place since mid-November, was part of an effort by Prime Minister Viktor Orban's government to shield Hungarians from inflation now at its highest level in two decades. The cap has been extended to the start of October and is limited to cars with Hungarian licence plates, a move that triggering a conflict with the European Union.

"We have introduced this limit (on refuelling) ... in order to be able to guarantee security of supply," MOL spokeswoman Piroska Bakos told Reuters, adding that buyers filling up jerry cans with fuel would no longer eligible for capped price fuel.

MOL Chairman and Chief Executive Zsolt Hernadi had said in April that maintaining the price cap, now far below current market prices, could lead to supply shortages.

Friday's announcement is the latest sign that intervention in the fuel market has affected the balance of supply and demand. Austria and Hungary released part of their strategic fuel reserves over the past weeks to stabilise the market.

MOL spokeswoman Bakos said demand for fuel normally rose by about 30-40% over the summer due to tourism and the farming season, which boosts diesel demand. But, the price cap has driven down fuel imports, which MOL has to offset now.

($1 = 379.2200 forints)

(Reporting by Krisztina Than and Gergely Szakacs; Editing by Edmund Blair)