Serbia to release reserve diesel due to global shortage, energy minister says

BELGRADE, Sept 24 (Reuters) - Serbia will release around 5,000 metric tons of diesel from state reserves to ease shortages stemming from a global supply squeeze caused by wars in Iran and Ukraine, the energy minister Dubravka Djedovic Handanovic said on Thursday. 

The wars have severely ‌disrupted global diesel supplies, stranding millions of barrels a day in the Middle East and Russia, draining inventories to historic lows and sending prices to record highs. The shortage has been a drag on economic activity, as diesel fuels agriculture, manufacturing, and heavy transportation.

"Therefore, we have decided to place a portion of the Eurodiesel stock, amounting to approximately 5,000 tons from the state reserves, onto the market," Djedovic Handanovic said in a statement. "We expect a very high consumption in October of around 205,000 tons."

She said companies had stopped importing diesel due to high prices. Logistics costs also remained high due to the low water levels on the Danube River. In August, Serbia's fuel imports via the Danube fell to just 25% to 30% of their planned volume as record-low water levels across Hungary, Serbia, and Romania forced cargo barges and tankers to operate at only 30% to 40% of their normal capacity.

Serbia's Russian-owned and US sanctioned NIS oil firm also produces diesel at its oil refinery in the northern town of Pancevo. The facility has an annual capacity of 4.8 million tons of crude oil.

In August, the energy ministry ordered NIS to increase its crude processing output from 9,500 tons to 13,000 tons per day and released 23,000 tons of operational fuel reserves to other market distributors to compensate for the drop in imports.

(Reporting by Aleksandar Vasovic; Editing by Louise Heavens)