US sanctions targeting Serbia’s Petroleum Industry (NIS) officially took effect on October 9, following several months of postponement. The measures, introduced in January as part of Washington’s broader effort to limit Russian energy exports after Moscow’s invasion of Ukraine in 2022, are now in force against the company that runs Serbia’s only oil refinery.

After the 6 a.m. deadline, NIS confirmed that it had not received another extension of the special license issued by the US Treasury Department. In a statement, the company said it was working to resolve the situation and would cooperate with American authorities to be removed from the sanctions list. It also assured that its crude oil reserves remain sufficient for processing and that all of its gas stations are fully stocked with petroleum products.

President Aleksandar Vucic warned days earlier that the sanctions could have serious consequences, especially for Serbia’s financial system. “No bank in the world would risk violating US sanctions,” he said on October 6. His concerns were echoed by NIS, which noted that foreign payment cards are expected to stop functioning at its gas stations, leaving customers to pay with local cards or cash only.

According to Belgrade-based economist Goran Radosavljevic, the sanctions could have far-reaching consequences beyond the energy sector. He cautioned that banks would need to immediately halt transactions and cooperation with NIS to avoid being classified as entities dealing with a sanctioned company. The impact could extend to agriculture, transportation, and even Air Serbia’s jet fuel supply, given that NIS provides over 80 percent of Serbia’s diesel and gasoline.

Discussions are reportedly underway regarding the company’s ownership structure, including the possibility of Russian shareholders pulling out. However, Radosavljevic doubts that scenario, noting that while NIS contributes only a small fraction of Gazprom’s revenue, it carries significant political weight. “Russia does not want to sell its shares,” he said.

Despite mounting Western pressure, Serbia continues to maintain close relations with Moscow and has not joined the EU’s sanctions regime against Russia, even as it pursues European Union membership. The country remains heavily dependent on Russian natural gas, with its existing supply contract, signed in spring 2022, set to expire soon. Talks for a new deal are already underway.

Currently, Gazprom Neft, the oil arm of Russia’s state-owned energy giant, holds a 45% stake in NIS. The Serbian government owns nearly 30%, while the remaining shares belong to minority investors.