Knezevo Diesel Tops 4 KM as Republika Srpska Pays 10M KM

Republika Srpska’s Ministry of Trade and Tourism said on September 20 that its fuel subsidy program has paid out around 10 million KM from the budget so far. The same day, some gas stations across Republika Srpska recorded higher prices, and diesel in Knezevo topped 4 KM per liter, the highest in the country. For Serbia, the price swings in the neighboring entity are a sign of how fast the regional fuel market can move, since Serbian pumps draw on the same import sources and face the same pressure from world markets.

According to the ministry’s statement, the direct support measure for citizens, businesses and entrepreneurs cuts the price of unleaded gasoline and diesel by 0.10 KM per liter at every gas station enrolled in the program. It took effect on April 15 and has been extended through October 15. Forty five businesses running a combined 281 gas stations across Republika Srpska have signed on. The ministry said any further extension past October 15 will be decided later, depending on how the market moves.

How much do prices differ from pump to pump

The subsidy runs alongside a separate regulation on fuel margins that has been in force since April 2021, capping the maximum markup at 0.06 KM per liter at wholesale and 0.25 KM per liter at retail. The ministry points to that cap as one of the main tools keeping retail margins from pushing prices even higher.

Even with those limits, prices on the ground vary from pump to pump. According to Otvoreno.ba, drivers at some Republika Srpska gas stations ran into higher prices on September 20, with diesel in Knezevo crossing 4 KM per liter, while other locations kept their prices lower, so drivers can compare before filling up. Distributors blame the increase on instability on world markets, rising crude oil prices and strained supply chains.

Just days earlier, according to the SrpskaCafe portal, pumps were selling fuel at 3.60 to 3.71 KM per liter. Djordje Savic, head of the Oil and Oil Derivatives Trading Group, told ATV that dealers were already warning of another increase:

We started warning about ten days ago that prices would go up, and that they could reach as high as 3.80. What we’re seeing at the pumps today is that prices are running between 3.60 and 3.71, with an upward trend.

Savic added that, by his estimate, prices could reach 3.75 KM within a day or over the coming weekend, and that the 3.80 KM mark could soon become the new benchmark for drivers in Republika Srpska. His estimate is an average across pumps covered by the subsidy, while Knezevo recorded a price above 4 KM that same day, already above that average.

What dealers say is driving the increase

Savic pointed to the conflict in the Middle East, the closure of the Strait of Hormuz, Houthi attacks and disruptions to shipping between the Red Sea and Europe as the main pressures on the oil market. He said a shortage of Euro diesel, mainly in Europe, is a particular problem.

• Republika Srpska has paid out about 10 million KM from its budget under the fuel subsidy
• the 0.10 KM per liter discount applies at 281 gas stations run by 45 businesses
• the measure runs from April 15 to October 15, with any extension depending on the market
• maximum margins remain capped at 0.06 KM wholesale and 0.25 KM retail
• diesel in Knezevo topped 4 KM per liter on September 20, the highest in the country
• days earlier, pump prices averaged 3.60 to 3.71 KM

Part of the price increase, Savic said, can also be put down to speculative trading, driven by fear and uncertainty over what comes next. He said he hopes there won’t be a fuel shortage, but warned that will depend on whether the Middle East conflict spreads to countries holding large volumes of oil derivatives:

What’s certain right now is that there’s a shortage of Euro diesel on the market. It’s mainly missing in Europe. At the moment, I think the most important thing is that we have fuel on the market and that our supply is secured, but unfortunately the price will be whatever it turns out to be.

The fuel subsidy isn’t the only market intervention by the Republika Srpska government this year. The Ministry of Trade and Tourism noted that maximum margins on basic foodstuffs and medicine remain capped through December 31, 2026, at 6 percent wholesale and 8 percent retail for products such as oil, salt, milk, flour and bread, and at 8 percent wholesale and 20 percent retail for medicine. The ministry also said 1,000 tons of flour have been secured for the most vulnerable segments of the population.

Whether diesel prices in Republika Srpska keep climbing toward the 3.80 KM mark flagged by the Oil and Oil Derivatives Trading Group, and whether authorities extend the subsidy past October 15, will depend on how the global oil market moves in the coming weeks.