The risk of a major oil crisis has passed for now, with some help from the U.S., but the EU could still force Belgrade to part ways with its longtime energy supplier.
PREDEJANE, Serbia | At the lone gas station in Predejane, a farming village of 1,500 in southern Serbia, the pumps click steadily on a winter afternoon. Cars pull off the highway. Drivers pay in cash. From the road, it looks like any other day.
The calm is deceptive.
Just off the E75 – Serbia’s main north–south artery and one of the Balkans’ busiest transit routes – the station has long been Predejane’s economic anchor, serving farmers, commuters, and truck drivers hauling goods between Greece, North Macedonia, Kosovo, and Central Europe. Operated by Naftna Industrija Srbije (NIS, or Oil Industry of Serbia), it is more than a fuel stop. It is a lifeline – and a reminder of how tightly Serbia’s fate remains bound to energy flows shaped far beyond its borders.
For months, Serbia had edged toward its most serious fuel security crisis in decades. U.S. sanctions imposed on NIS – the Gazprom Neft–controlled company that operates Serbia’s only oil refinery and much of its fuel network – cut off crude supplies and forced the Pancevo refinery to shut down for 36 days. The country was pushed onto reserves and emergency imports, exposing the fragility of an energy system built on decades of dependence on Moscow and Russian companies.
In Belgrade and other major cities, the emergency barely registered. Foreign-owned fuel chains continued to operate, offering drivers alternatives to the Russian-controlled network. Along the highways, stations stayed open, even as NIS outlets grew conspicuously quieter, avoided by drivers whose international credit cards no longer worked.
In rural Serbia, the margin for error was far thinner. Predejane is one of 51 municipalities with only a single gas station. Once reserves run low, there is no fallback.
And yet, through December, the pumps still ran. Drivers paid with cash or Dina cards – Serbia’s domestic payment system. There were no lines, no panic buying. Many residents trusted President Aleksandar Vucic’s repeated assurances that fuel supplies were secure. If shortages came, locals said they could drive to nearby Leskovac, or cross into Bulgaria, North Macedonia, or Kosovo. Most had lived through the wartime sanctions of the 1990s. If they survived those, they’d manage again.
But for Dragan Savic, a 73-year-old former teacher, economist, and longtime local opposition councilor, the calm was familiar – and misleading.
“Most people watch public television,” he said. “It has convinced them, especially the older generation, that the president is pursuing the best possible policy for Serbia. The power of television is incredible.” Someone, he warned, will pay the price. “And it won’t be the president,” Savic said. “Living standards will fall. The economy will suffer.”
When the Balance Broke
For more than two decades, Belgrade has walked a careful tightrope: cultivating close ties with Moscow while deepening economic integration with the European Union, its largest trading partner and main source of investment. An EU candidate since 2012, Serbia has presented itself in European capitals as a pragmatic partner of Brussels – while relying on Russia at home, especially for energy.
That “multi-vector” policy allowed Vucic to postpone hard choices while consolidating power, said Frauke Seebass, a Western Balkans expert at the German Institute for International and Security Affairs in Berlin. Nearly four years after Russia’s massive invasion of Ukraine, she said, “that balancing act is finally fading.”
The break came in October. After months of delay, Washington allowed sanctions against NIS to fully take effect. Crude supplies were cut. The Pancevo refinery shut down. Serbia was pushed onto reserves and emergency imports – and Vucic into a stark political dilemma: comply with U.S. demands to remove Russian ownership from NIS or preserve ties with Moscow and risk sanctions, shortages, and rising prices.
Pressure was already building from the other side. When Serbia’s long-term gas contract with Gazprom expired last May, Russia offered only a short-term extension, breaking with decades of multi-year agreements that had guaranteed stability and predictability. Analysts saw the move as a reminder that even if Russia would be forced to loosen its grip on Serbia’s oil sector, it would retain a powerful tool of influence. The shift forced Belgrade into constant renegotiation at a moment of dwindling reserves and few alternatives, tightening the squeeze on a government already under pressure from Washington, Brussels, and the street. The EU’s recent decision to completely ban the import of Russian gas starting by late 2027 is adding another layer of uncertainty for Serbia.
In response, the Serbian government gave Russian stakeholders 50 days to find a third-country investor or face a forced takeover. Vucic called the situation “complicated” but insisted there was “no reason to panic.” Fuel reserves would last well into January, he said.
He made it clear he did not want nationalization. Vladimir Putin made it equally clear he did not intend to relinquish control. In December, Putin praised Gazprom Neft’s role in modernizing NIS and dismissed U.S. sanctions as “part of power politics.” “We have an idea in which direction we want to move forward together,” he said.
Turning North
Behind the scenes, diplomacy intensified. December saw a flurry of talks involving Washington, Moscow, Belgrade, and Budapest. “Any decision on NIS must be in accordance with the spirit of relations between Moscow and Belgrade,” said Russia’s ambassador to Belgrade, Alexander Botsan-Kharchenko.
By year’s end, analysts said Gazprom Neft was negotiating with Hungary’s MOL as a potential buyer – a solution seen as palatable to both Washington and Moscow and a prerequisite for any deal.
Then came the reprieve.
In late December, as fuel reserves began to drain, the United States issued a temporary operating license for NIS, valid until late January, alongside a 24 March deadline for a sale of the Russian stake. The move allowed the Pancevo refinery to restart, averting an outright shutdown and stabilizing supplies in the middle of winter.
On New Year’s Eve, an upbeat Vucic announced that negotiations between Gazprom Neft and MOL could be completed this month.
For a moment, Serbia appeared to have found a way to loosen Russia’s grip on its only refinery – without fully breaking with Moscow – by transferring ownership to another Russia-friendly ally.
“What I could envision is a trilateral arrangement,” Seebass said, meaning Serbia, Hungary, and Russia, “that serves the interests of all three.”
For Belgrade, a MOL deal could defuse the immediate crisis while preserving Russian goodwill, still politically valuable at home. For Hungarian Prime Minister Viktor Orban, it reinforces his role as a regional energy broker, an issue he will likely use in Hungary’s upcoming elections in April. For Moscow, it would avoid a forced takeover while preserving influence.
For Brussels, the picture could be more troubling. Hungary remains the EU’s largest importer of Russian crude and has floated plans for new pipelines that could keep Russian oil flowing south, raising fears that Hungary may become a conduit through which Serbia preserves Russian energy ties even as the EU moves to cut them off.
But workarounds would be “shaky,” says Seebass: it would depend on Washington extending the exemption from energy sanctions it granted Hungary. And the European Union has committed to phasing out Russian oil and gas by 2028. Serbia, almost entirely dependent on Russian gas, faces a closing window. The TurkStream pipeline supplying the country may not remain viable once Hungary and Slovakia halt purchases by the end of 2027.
The MOL deal was clinched on 19 January, when Serbia’s Energy Minister Dubravka Djedovic Handanovic announced that Gazprom Neft and parent company Gazprom had agreed to sell their majority stake in NIS to the Hungarian company.
MOL also confirmed the deal, Bloomberg reports, and said that it could be completed by late March. The only potential hitch: the deal must win approval by the U.S. Office of Foreign Assets Control and the Serbian government.
Energy as Leverage
The uncertainty hanging over Serbia’s energy picture is only the most visible symptom of a deeper rupture – one laid bare by the war in Ukraine and the competing pressures it has placed on Belgrade.
Serbia’s dependence on Russian energy has been decades in the making, feeding on deep ties anchored in a shared Orthodox faith, historical memory, and distrust of the West.
That dependence dates back to the Cold War, when Yugoslavia began importing Soviet gas under long-term contracts. Soviet-built pipelines linked the country to Moscow’s export network via Ukraine and Hungary, creating a system that was cheap, predictable, and politically useful.
After Yugoslavia’s collapse, Serbia inherited both the infrastructure and the dependency. The wars of the 1990s, NATO airstrikes, and sweeping sanctions pushed Belgrade even closer to Moscow, especially over Kosovo, which most Serbs still consider the cradle of their national identity.
The decisive moment came in 2008. After Kosovo unilaterally declared independence and Western governments recognized it, Serbia turned to Russia for diplomatic backing to block Kosovo’s international recognition. That same year, Belgrade opened its energy sector to Moscow, selling a majority stake in NIS to Gazprom Neft at a price widely criticized as below market value.
That NIS deal was controversial, said Strahinja Subotic of the European Policy Center in Belgrade. “But there was a general understanding that it was necessary – essentially to buy Russian loyalty and preserve Serbia’s position on Kosovo.”
The deal was part of a broader strategic energy partnership between Russia and Serbia, aimed at locking in Moscow’s influence across Southeast Europe while bypassing Ukraine. It envisioned the construction of a new pipeline, South Stream, which would have deepened Russia’s grip on the region’s gas sector. The project was canceled in 2014 after the European Union ruled that it violated EU competition and energy market rules. Russia later replaced it with TurkStream, now the sole remaining pipeline carrying Russian natural gas to Europe, which follows a different route via Turkey, making Russia the primary gas supplier to Serbia and reinforcing Moscow’s leverage over the country’s energy security while ultimately serving a similar strategic purpose. By the start of this decade, Russian control over Serbia’s oil and gas markets was near-total.
For years, the arrangement was stable and politically useful. Until it wasn’t.
The Shock
After Russia’s invasion of Ukraine in 2022, the EU moved to cut dependence on Russian energy. “There was a lot of expectation, including in Belgrade, that this would have to be the end of the balancing act between the East and the West,” Seebass said.
It didn’t turn out that way. Serbia condemned the invasion but rejected sanctions on Russia. It affirmed Ukraine’s territorial integrity while signing a new gas deal with Moscow at favorable prices. It allowed Serbian and Bosnian ammunition to reach Ukraine indirectly through EU states, halted deliveries under Russian pressure, and then quietly resumed them.
Vucic’s foreign policy became a “house of cards” that stayed upright even as he tightened his grip at home, grew more authoritarian, and used force to suppress protests, drawing criticism from Brussels, but little sustained pressure.
“We saw quite a united EU against Russia,” said Seebass, “but no real pressure on Serbia to retract from its relations with Moscow.”
Business interests helped blunt the response: German lithium ambitions, French industrial contracts – strategic patience, dressed up as pragmatism.
The result was diplomatic whiplash. In September last year, Vucic stood beside Putin in Beijing, announcing continued Russian gas flows. Weeks later, he was in Paris, standing next to President Emmanuel Macron as Alstom, a French company, was confirmed to build Belgrade’s first subway line.
Then Washington shook the structure. By refusing to extend sanction exemptions for NIS in October – after concluding that Belgrade had failed to use months of grace to dilute Russian control over the Pancevo refinery – the United States exposed the fragility beneath Serbia’s balancing act, pushing the country toward a genuine fuel crisis. “By definition, reserves are limited. We’re talking weeks or months, not years,” Subotic said. “That shows how urgent this is.”
A Fragile Calm
That pressure has since been partially eased after Washington granted NIS the temporary operating license at the end of December, allowing the refinery to restart on a limited basis, in a move intended to prevent immediate shortages and social disruption while keeping sanction pressure intact. The waiver buys time, although not certainty, experts say, and does little to resolve Serbia’s underlying dilemma: whether to restructure its energy sector and break with Moscow, or continue absorbing the economic and political costs of Russian ownership.
Vucic is now feeling pressure from every direction. Washington is pushing for a full Russian exit from NIS. Moscow is determined to preserve its influence, including through gas supplies. “It’s a two-direction dynamic,” said Petr Cermak of the Association for International Affairs in Prague. “Serbia can threaten nationalization. Russia can squeeze gas supplies. Both sides have leverage.”
At the same time, Brussels is growing more impatient, and domestic discontent is rising. “This could have been prevented,” said Milos Pavkovic, chief strategist and senior researcher at the European Policy Center in Belgrade. He argues the government ignored repeated warning signs from Washington, under both the Trump and Biden administrations. He points to Bulgaria, which placed its Russian-owned refinery under state supervision, secured alternative supplies, and pushed the Russian owner out before a crisis unfolded.
For Vucic, however, any move away from Moscow carries political risk. Vladimir Putin remains popular among many Serbs.
That risk seems to be growing. Recent polls indicate that more than half of Serbs believe the country is moving in the wrong direction, for the first time since 2012, according to Pavkovic. That was when the post-Milosevic Democratic Party collapsed, clearing the way for Vucic’s Serbian Progressive Party.
Unlike previous waves of unrest that eventually faded, the ongoing student-led protests demanding accountability and action against corruption show no sign of losing momentum. Public frustration, however, has not translated into renewed enthusiasm for the European Union. Support for EU membership has fallen to historic lows, driven by disillusionment with Brussels’ long tolerance of democratic backsliding in Serbia.
Still, “the EU is sort of waking up,” Seebass thinks. In its latest enlargement report, Brussels warned of rising polarization and stalled reforms. Once seen as a frontrunner, Serbia has slipped behind Albania and Montenegro, analysts say.
Time, Not Answers
Washington’s tempora license for NIS may have bought time but has provided no real long-term clarity. How can Vucic continue to navigate between Washington’s demands, Moscow’s leverage, Brussels’ impatience, and mounting domestic pressure? And can Serbia, now almost entirely dependent on Russian gas, count on those supplies in the years ahead?
“Regardless of the short- or medium-term solution,” Bojan Stanic, an economist at the Serbian Chamber of Commerce and Industry, said in late December, “Serbia must face the long-term reality: both oil and gas must pass through EU territory, and alignment with EU policy will become unavoidable.”
In Predejane, the pumps are still running. For some residents, the temporary easing of U.S. sanctions – and the prospect of a deal involving Hungary’s MOL – is proof that the president delivers. There is still no panic buying.
But others remained unconvinced. “President Vucic bears exclusive responsibility for everything that is happening to us,” said Savic, who was the first local councilor elected on the ticket of the opposition Democratic Party after the Milosevic era. Vucic, Savic added, has “suspended all institutions and led us almost into an open dictatorship.” Serbia, he argued, is now “paying the price for having very naively allowed Russia to become the majority owner of NIS.”
As Serbia enters the new year, Vucic continues to appeal to all sides. “In the long run,” Seebass predicts, “we will see a reduction of both Hungarian and Serbian dependence on Russian energy. But I do not necessarily see a real realignment with the EU under the current government.”
For now, that balancing act may still serve the Serbian leader. “The house of cards is still standing,” Seebass said.
How long it can hold is another question.
Isabelle de Pommereau is a freelance journalist writing for international news outlets such as The Christian Science Monitor, Alternatives Economiques, and New Eastern Europe. Based in Frankfurt, Germany, she often writes on issues around the transformation of ex-Soviet countries.
