Serbia’s long-standing dependence on Russian energy is coming under unprecedented strain as US sanctions hit the country’s oil sector and expose the political and economic risks of its strategic alignment with Moscow.

At the heart of the storm is Petroleum Industry of Serbia (NIS), the national oil company that operates both of Serbia’s refineries and supplies the vast majority of its fuel. More than half of NIS is owned by Russia’s Gazprom and Gazprom Neft – a structure that once symbolised Serbia’s special relationship with Moscow, but has now turned into a liability.

Last month, Washington brought NIS under sanctions because of its ties to Russia’s energy industry. According to Serbian Energy Minister Dubravka Djedovic Handanovic, NIS’s Russian shareholders have since approached the US administration to request a waiver, signaling that “the Russian side was ready to transfer the control and influence upon the company to a third party.” But, she warns, the clock is ticking.

Sanctions felt at the pump

The impact of the US measures has been immediate and highly visible to ordinary Serbs.

At NIS petrol stations across the country, signs now inform customers that Visa and Mastercard are no longer accepted. The US credit card giants have stopped processing transactions involving the sanctioned company, forcing motorists back to cash in a country where card payments had become increasingly common.

The same applies to Gazprom-branded service stations operated by the Russian shareholders. At a station on the motorway between Novi Sad and Belgrade, staff have reverted to an almost old-fashioned routine: they pump petrol and diesel for customers before checking whether they can actually pay. One attendant, Bojan, estimated that roughly one in ten drivers arrive without cash – “mostly foreigners,” he said. A cash machine has been hastily installed inside the shop to soften the shock.

What looks like a payment problem at forecourts is really a symptom of a much deeper vulnerability.

A landlocked state at a strategic chokepoint

NIS runs both of Serbia’s oil refineries and provides more than four-fifths of the country’s petrol and diesel, as well as almost all jet fuel and heavy fuels. There is no quick substitute for that capacity.

Serbia, being landlocked, relies on crude deliveries via Croatia and the Janaf pipeline. Since sanctions on NIS took effect, that flow has been cut off. Without alternative routes or suppliers already lined up, Serbia’s refineries face the prospect of running out of crude before the end of November.

This looming deadline explains the urgency in Belgrade. If refineries are forced to halt operations, the consequences would go far beyond queues at petrol stations: aviation, freight, public transport and industry would all face disruptions. An energy crunch in late autumn would also threaten to spill over into domestic politics, where the government has long promoted itself as a guarantor of stability.

A rift with a “traditional ally”

The sanctions saga is also straining Serbia’s relations with its most important non-Western partner. Moscow and Belgrade routinely describe each other as “traditional allies,” bound by historic, cultural and religious ties. But those bonds are now being tested by diverging interests in energy, arms and geopolitics.

President Aleksandar Vucic has entered into public spats with the Kremlin over the future of gas supplies, Serbia’s arms trade and the fallout from the oil sanctions. While Serbia has refused to join Western sanctions on Russia over the invasion of Ukraine, it now finds itself indirectly caught by US measures aimed at Moscow’s energy sector.

If Russian shareholders ultimately transfer control of NIS to a “third party” to obtain a waiver, it would amount to a significant rollback of Russia’s strategic foothold in Serbia’s energy industry. For Moscow, that would be an unwelcome precedent in a region where it has used energy assets as tools of influence. For Belgrade, it would mark a reluctant step towards diversifying away from Russian ownership under external pressure rather than by choice.

A regional wave of decoupling

Serbia is not alone in facing this dilemma. Across the Balkans, governments are being forced to rethink their dependence on Russian oil and gas as Western sanctions and political risks mount.

Neighbouring Bulgaria has already moved more decisively. Its parliament has passed legislation to take over the country’s only oil refinery from Russian oil giant Lukoil ahead of US sanctions entering into force on 21 November. That measure effectively pushes a key Russian player out of a strategic asset on the Black Sea.

Further north, Hungary has chosen a different path. Prime Minister Viktor Orban, one of Europe’s most Russia-friendly leaders, has secured a one-year waiver from US President Donald Trump, allowing Budapest more time to adjust – and underscoring the extent to which political relationships can shape the impact of sanctions.

Together, these cases sketch a picture of a region being pulled in different directions: some states accelerating their break with Russian energy, others seeking carve-outs, and countries like Serbia stuck in the middle, constrained by geography, legacy infrastructure and domestic politics.

Hard choices ahead for Belgrade

For Serbia, the crisis around NIS crystallises a broader strategic question: how far and how fast it is prepared to move away from Russian energy, and at what economic and political cost.

On the one hand, maintaining the status quo is becoming untenable. As long as key assets remain under Russian control, they are vulnerable to US and EU restrictions. Disruptions to payment systems and physical deliveries reveal just how quickly sanctions can translate into domestic turmoil.

On the other hand, unwinding Russian ownership and redesigning supply routes will be complex and expensive. It could also provoke political backlash at home and irritation in Moscow, which still wields influence in Serbia through energy, media and diplomatic support on issues like Kosovo.

In the short term, Belgrade’s priority will be to avoid a fuel shortage by securing a deal on NIS that satisfies US authorities while preserving operational continuity. In the long term, however, the episode serves as a stark warning: energy dependence can turn into strategic vulnerability overnight, especially when it is tied to a partner at the centre of global sanctions.

Whether Serbia uses this crisis as a trigger to diversify and modernise its energy sector – or merely seeks temporary fixes to keep Russian structures in place – will shape not only its economic resilience, but also its geopolitical trajectory in an increasingly polarised region.