September the 17th, 2026 – Saudi Arabia has stopped oil deliveries to Europe following a drone incident, but what exactly does this mean for Croatia specifically?
Saudi Arabia has cancelled crude oil deliveries to European refineries after drone attacks damaged a key Saudi oil pipeline leading to the Red Sea. As a result, Europe’s largest buyers are urgently seeking replacement oil. Index/Neven Barkovic reports that hehind the halt in deliveries is the closure of the East-West pipeline, through which the Saudis transport millions of barrels of oil daily to the port of Yanbu on the Red Sea in order to bypass the Strait of Hormuz. After the 10 September attack, which Saudi Arabia blames on Iraqi militias, the pipeline was shut down. Since 11 September, not a single tanker carrying oil has left Yanbu for Europe.
The interruption immediately created a major problem in Europe, which, after imposing sanctions on Russia over its invasion of Ukraine, has relied heavily on Saudi oil. At least three European refineries have been left without their agreed shipments for the end of September, with deliveries postponed as far as November. Polish oil giant Orlen, which covers around 40 percent of its needs with Saudi oil, is now rapidly buying stocks from the North Sea and the United States to keep its refineries in Poland, the Czech Republic and Lithuania running.
The market reacted to this disruption with a rapid rise in prices. While Brent crude futures are trading at around $108 per barrel, on the physical market in Europe the price of the benchmark barrel has reached as high as $122.
croatia has stocks… but they’re getting pricier
What does this mean for Croatia, specifically? There will be no physical shortages of oil at domestic petrol stations. Croatia supplies itself with crude oil by sea via the terminal in Omišalj and the JANAF system, sourcing it from various origins – from Mediterranean and North African to American. The domestic refinery in Rijeka is not directly dependent on the Saudi port of Yanbu in the way that refineries in northern and eastern Europe are.
However, expensive European oil will inevitably affect prices at Croatian pumps. Retail fuel prices in Croatia are calculated on the basis of quotations for petroleum products on the Mediterranean market (CIF Med). When the physical barrel price in Europe jumps above $120, this automatically raises Mediterranean quotations, meaning that in the next calculation cycle the input price of fuel for Croatia will be significantly higher.
can the government do anything?
Whenever fuel prices at the pumps rise significantly, citizens’ first question is – why doesn’t the state lower the levies? In every litre of fuel that drivers put into their tanks in Croatia, state levies – the fixed excise duty and VAT – make up more than a third of the total price. Croatia has a general VAT rate of as much as 25 percent, one of the highest in the entire EU, which is moreover calculated on the total amount after the excise duty has already been included. In other words, the state systematically charges tax on tax. As the price of the raw material on the exchanges rises, the budget automatically collects more and more money from VAT on every litre sold, without ministers having to lift a finger.
Although those in power regularly defend themselves with claims that their hands are tied by European directives on minimum excise duties and that they have already used the room for intervention, the real reason for refusing greater tax relief lies in the habit of filling the state coffers. Excise duties and taxes on energy products bring in hundreds of millions of euros of clean, secure and rapid revenue that the state uses to finance a huge public sector, the growth of the administration and political compromises.
cheap political manoeuvres and more and more money…
Any serious discussion about the state permanently forgoing part of that money is interrupted by the thesis of a “budget hole”, even though that shortfall could easily be made up by rationalising public spending, cutting unproductive costs and reducing the oversized state apparatus. Instead of taking that path, the authorities prefer to protect budget revenues at the expense of citizens’ living standards and the economy’s business operations.
That is why the Croatian Government has for years primarily relied on the cheapest political manoeuvre: pressure on distributors’ commercial margins. But margins make up only a smaller part of the final fuel price, and their administrative cutting pushes small private petrol stations towards the edge of profitability and creates the risk of some sales points closing. By shifting the burden onto traders and customers, the state retains its own lion’s share of every bill, while at the same time serving citizens the story that it is doing everything in its power. Economy Minister Ante Šušnjar justifies the rise in oil prices solely by the crisis around the Strait of Hormuz and global disruptions, claiming that the Government skilfully uses the tools at its disposal and that Croatia, despite the price rise, has the cheapest fuel in the region.
“Security of supply comes into question if exchange trends are not followed. Government decisions are balanced so as not to endanger security of supply, while still keeping petroleum products affordable,” Šušnjar said, repeating that Croatia has already used the EU exception and lowered excise duties below the prescribed European minimum. But the minister thereby conceals that with every new wave of price increases the state collects more and more money per litre through VAT, while in practice almost entirely shifting the burden of the crisis onto the backs of citizens and the cutting of distributors’ margins.
