North Macedonia’s government has declared a nationwide crisis situation in the supply of crude oil and petroleum products, while insisting that the country’s fuel reserves remain stable and that there is no immediate danger of shortages. Prime Minister Hristijan Mickoski said the measure was adopted to allow institutions to act more quickly and use the legal mechanisms available if market disruption worsens. He also said the state has stable reserves and previously stated that strategic stocks are sufficient for around 62 days of daily consumption, with the system designed to move toward the 90-day standard.
The crisis decision came amid strong pressure on fuel prices caused by the Middle East conflict and volatility in global oil markets. In earlier statements, Mickoski had said there was no need for a crisis declaration because supply was under control, but the government later moved to formalize the crisis framework as part of a wider intervention package.
VAT on fuels cut from 18% to 10% for two weeks
At the center of the government’s response is a temporary reduction of VAT on petroleum products from 18% to 10%, effective from Monday at midnight and set to remain in force for two weeks. The government says the goal is to cushion the price shock for citizens and businesses and prevent a much sharper increase at the pump.
Mickoski said the cabinet chose to reduce VAT rather than excise duties because it wanted a “more robust intervention.” He argued that this model would produce a stronger effect in current market conditions and directly reduce the burden on end users.
According to his explanation, if the government had not intervened, the Energy Regulatory Commission would likely have had to raise the price of diesel by 10.5 denars per liter and gasoline prices by around 6 denars per liter. Instead, the government now expects gasoline prices to remain broadly unchanged, while diesel would rise by only 3 to 3.5 denars per liter. Mickoski also said the move saves consumers roughly €200,000 per day, or about €1.5 million per week, based on estimated average daily fuel consumption.
Why did the government choose VAT instead of excise cuts
In defending the decision, Mickoski said the government had considered various options but concluded that cutting VAT would have a broader and faster market effect than reducing excise. He presented the move as a direct effort to protect citizens’ standard of living at a moment when international prices are rising because of war and market uncertainty.
He also linked the decision to regional market pressure, saying North Macedonia is already under additional demand because of comparatively lower fuel prices than neighboring countries. In one statement, he said foreign drivers were consuming up to 150,000 liters daily, although for now the government does not plan to impose fuel-sale restrictions on foreigners.
ERC changes rulebook, opening space for faster price decisions
Parallel to the government package, the Energy Regulatory Commission amended the rulebook on the formation of the highest retail prices of oil derivatives and transport fuels. The changes were adopted at a session held on March 4, under the Energy Law, and the adjustment allows the regulator to react more quickly to abrupt market movements, including making decisions daily when circumstances require it.
This is significant because retail fuel prices in North Macedonia had already risen sharply earlier in March. One March 10 decision by the regulator increased gasoline prices by 5 denars per liter and diesel by 14.5 denars per liter, illustrating how quickly global movements were being transmitted into the domestic market.
Government message: intervention now, wider scenarios ready
The government’s message has been that the current intervention is only one step in a broader contingency plan. Mickoski said the cabinet has prepared a range of scenarios in case the crisis continues or deepens and emphasized that in a global energy shock, the state must not become an additional burden on citizens and companies.
Taken together, the measures show a two-track response: declaring a formal crisis to widen the government’s room for maneuver while using tax policy and regulatory changes to blunt immediate price increases. The authorities maintain that supply is stable and reserves are sufficient, but the latest decisions also make clear that Skopje expects continued volatility in the fuel market and is preparing for a longer period of pressure.
