On November 25, 2025, Serbia’s only oil refinery, the Petroleum Industry of Serbia (NIS), found itself at the center of a geopolitical and economic storm. The facility, located in Pancevo and controlled primarily by Russian shareholders, halted production after running out of crude oil supplies—a direct consequence of U.S. sanctions that have rippled through the region’s energy sector and left Serbian officials scrambling for solutions. The shutdown marks a pivotal moment for Serbia, whose energy security now hangs in the balance as winter approaches and diplomatic negotiations intensify.
According to Reuters, the chain of events began in January 2025, when the U.S. Office of Foreign Assets Control (OFAC) imposed sweeping sanctions on Russia’s oil sector, including NIS. While the refinery initially received a temporary reprieve, the restrictions came into full force in October. The impact was immediate: banks halted processing NIS payments, and Croatia’s JANAF company suspended oil deliveries to the Serbian plant. With the supply of crude oil abruptly cut off, the refinery’s ability to produce gasoline, diesel, and aviation fuel ground to a halt.
Ownership of NIS has long been a point of contention. Gazprom Neft holds 44.9% of the shares, Gazprom another 11.3%, Serbia 29.9%, and the remaining shares are divided among smaller investors. This majority Russian stake made NIS a prime target for U.S. sanctions designed to pressure Moscow in the wake of its 2022 invasion of Ukraine. The United States has now demanded a complete Russian exit from NIS, giving the current Russian owners three months to find a buyer for their shares.
President Aleksandar Vucic addressed the nation on November 25, explaining the precarious situation. He revealed that the Pancevo refinery had entered what he called “warm circulation”—a reduced operating mode that precedes a full shutdown. “It’s not shut down yet, but it’s at a lower level of operation. We still have four days until the refinery is completely shut down if the licence is not approved by the US government,” Vucic said in a special address, as reported by bne IntelliNews. The government had been counting on a new license from OFAC to allow NIS to continue processing crude while negotiations over its ownership continued, but approval had not been forthcoming.
In the days leading up to the shutdown, Energy Minister Dubravka Djedovic Handanovic assured the public that the refinery would operate without disruption until November 25. The Serbian government took steps to stockpile fuel reserves and contracted for new import volumes to cover December, hoping to cushion the blow. On November 24, Handanovic convened meetings with representatives from MOL, EKO, and OMV—major regional fuel suppliers—to discuss securing stable supplies. The government insisted there was “no reason for concern,” citing adequate petroleum product stocks and incoming deliveries, including 20,000 tonnes of Euro diesel and 38,000 tonnes of gasoline for state reserves in December and January.
Despite these reassurances, experts warn that imports alone cannot fully replace the refinery’s output. Economist Goran Radosavljevic told AFP, “Production covered around 80% of everything, and imports were about 20%.” With the refinery offline, Serbia faces a potentially significant shortfall. For now, there have been no fuel shortages or queues at NIS petrol stations, though customers have had to pay in cash or with local Dina cards due to banking restrictions. Still, the situation remains fragile, and the government’s ability to maintain stable fuel supplies will be tested in the weeks ahead.
The sanctions’ effects have also been felt beyond Serbia’s borders. According to Mezha, the Finnish fuel station network Teboil, controlled by Russia’s Lukoil, is preparing to close outlets as its own fuel stocks dwindle under the pressure of Western sanctions. Meanwhile, regional oil markets are being reshaped as countries like Kazakhstan cut production at major fields following attacks on Russian infrastructure, further tightening the supply of energy resources in Eastern Europe.
Washington’s insistence on a full Russian exit from NIS has set off a flurry of negotiations. President Vucic confirmed that Russia, through its subsidiaries Gazprom Neft and a St Petersburg-based firm called Intelligence, is in talks with three potential buyers. Serbian media have speculated that Abu Dhabi National Oil Company (ADNOC) and Hungary’s MOL are among the interested parties. The outcome of these negotiations will determine not only the future of Serbia’s energy sector but also the broader balance of power in the region.
Amid all this, NIS filed a fresh license request with OFAC on November 18, seeking permission to maintain normal operations at the Pancevo refinery while ownership talks proceed. The uncertainty over the refinery’s fate comes at a delicate time, as the U.S., Ukraine, and Russia are engaged in discussions over a new peace framework that could lead to a ceasefire in the nearly four-year-old conflict. Analysts suggest that any linkage between sanctions relief and a peace deal could complicate Moscow’s willingness to divest its overseas assets, including NIS.
For ordinary Serbians, the immediate concern is whether fuel will remain available and affordable as winter sets in. The government’s message has been consistently optimistic, but as the refinery’s shutdown becomes a reality, anxiety is mounting. The loss of NIS’s production capacity—which historically met about 80% of the country’s fuel demand—means Serbia will be more reliant than ever on imports, subject to the vagaries of international markets and political decisions made far beyond Belgrade.
In the longer term, the crisis highlights the risks of energy dependence and the complex web of alliances and enmities that shape the region’s fortunes. Serbia’s close ties to Russia, once seen as a strategic asset, have now become a liability in the face of Western sanctions. The coming months will reveal whether the country can successfully pivot to new suppliers and partners—or whether the current disruptions are a sign of deeper vulnerabilities to come.
As negotiations continue and the search for a new owner intensifies, the fate of Serbia’s only oil refinery remains uncertain. What is clear, however, is that the intersection of global sanctions, energy security, and regional politics has left Serbia at a crossroads—one where every decision carries weighty consequences for its economy, its people, and its place in a rapidly changing world.
