Serbia Grapples with Worsening Energy Crisis Amid US Sanctions on NIS

US Sanctions Cripple Serbian Oil Sector

Serbia's energy situation has significantly deteriorated following the full implementation of US sanctions against Naftna Industrija Srbije (NIS), the country's primary oil company. The sanctions, which became effective on October 9, 2025, target NIS due to its majority Russian ownership, with Gazprom Neft holding 44.85% and another Gazprom-controlled entity, Intelligence, holding 11.3% of shares. The Serbian state retains a 29.87% stake. These measures are intended to prevent the financing of the war in Ukraine.

The immediate impact has been severe, particularly on Serbia's energy infrastructure. The Pančevo refinery, the nation's only oil refinery and a critical facility supplying over 80% of domestic gasoline and diesel, suspended crude processing on November 25, 2025. It has since been operating on 'hot standby' or is set for a complete shutdown due to the lack of crude oil. Furthermore, the Croatian JANAF pipeline, a vital route for crude oil imports to Serbia, ceased supplies on the same day the sanctions took effect.

President Vučić Seeks Solutions and Warns of Further Risks

Serbian President Aleksandar Vučić has been actively addressing the escalating crisis. He recently met with European Commission President Ursula von der Leyen and European Council President António Costa in Brussels on December 10, 2025, to discuss the urgent energy concerns. During these discussions, President Vučić highlighted that Serbia has not received any crude oil for over two months.

A major concern articulated by President Vučić is the potential for secondary sanctions. He warned that Serbian financial institutions, including the National Bank of Serbia and commercial banks, could face restrictions if they continue processing payments for NIS. Such a development could lead to a complete halt in payment transactions and card operations, posing a significant threat to the broader Serbian economy. The President has stated that the issue of NIS's future must be resolved by January 15, 2026.

Exploring Alternative Supply Routes and Ownership Options

In response to the supply disruptions, Serbia is actively exploring alternative sources for petroleum products. Discussions are underway regarding oil imports from neighboring countries such as Romania and Bulgaria. These talks also encompass the potential construction of new pipelines, including product pipelines, and a gas interconnector with North Macedonia to diversify energy routes.

Regarding the ownership of NIS, several options are being considered to circumvent the sanctions. These include the sale of the Russian stake to a third party, with the Abu Dhabi National Oil Company (ADNOC) and Hungary's MOL reportedly showing interest. President Vučić has also indicated that if a third-party sale does not materialize, the Serbian state is prepared to purchase the Russian share, emphasizing that Serbia will not nationalize the company but rather acquire the stake at a fair price.

Broader Energy Challenges

The current oil crisis is compounded by other energy challenges facing Serbia. The country is also contending with historically low hydroelectric power production due to prolonged drought and issues related to the quality of coal used for electricity generation. The combined effect of these factors presents a complex and severe energy security challenge for Serbia as it heads into the winter months. NIS's extensive network of over 400 gas stations across the Balkans further underscores the regional implications of its operational difficulties.