A sharp rise in fuel prices in North Macedonia has triggered public debate, with analysts warning that recent changes to the pricing methodology could keep domestic prices elevated even as global oil markets retreat.
Earlier this week, the country’s energy regulator raised retail fuel prices significantly, increasing diesel by 14.5 denars per litre and petrol by 5 denars, following several days of volatility in international oil markets driven by tensions in the Middle East and a military escalation involving Iran.
Analysts say the increase reflects a seven-day cumulative rise in global fuel benchmarks and the U.S. dollar exchange rate, which are key inputs in the pricing formula used by the country’s energy regulator.
However, experts warn that a recent regulatory change — shifting the calculation of maximum fuel prices from a daily to a weekly update — could delay the adjustment of domestic prices when global markets move lower.
“When global oil prices were rising, petrol and diesel prices in the country were effectively frozen at lower levels, which often led to shortages at filling stations,” analysts said. “Now that international prices have begun to fall, domestic prices risk remaining frozen at a higher level.”
Fuel prices in North Macedonia are determined through a formula that tracks movements on international petroleum exchanges and the denar-to-dollar exchange rate. Analysts say adjusting the parameters of the formula is technically straightforward and has been done before, including during the energy crisis at the start of the war in Ukraine.
Global oil markets have seen sharp swings in recent days. On Feb. 28, a barrel of crude traded at around $63–$64. Prices climbed to about $90 by Friday and briefly surged to as high as $116 before falling back to roughly $89 later the same day.
Despite the subsequent decline, the regulator’s decision incorporated the cumulative increase over the previous week, leading to the sharp adjustment in domestic fuel prices.
Economists warn that such a sudden rise could have ripple effects across the broader economy, pushing up transport and production costs and potentially fuelling inflation. Annual inflation had slowed to 2.9% in February.
If geopolitical tensions persist and global oil prices rise further, the government has said it could deploy fiscal tools to soften the impact on households.
Possible measures include reducing fuel excise duties by several denars per litre or cutting the value-added tax on fuel from 18% to 5%, steps that authorities have used previously during periods of high energy prices.
North Macedonia’s Prime Minister, Hristijan Mickoski, said the country still has some of the lowest fuel prices in the region, but acknowledged that the price gap is creating pressure in border areas.
“It is a fact that we currently have by far the lowest fuel prices as a country, which may be good at the moment,” Mickoski said. “But in border municipalities, especially at filling stations near the borders, pressure is being created because many citizens from neighbouring countries come to fill up with diesel.”
As a result, some filling stations have temporarily run out of fuel, although supplies are quickly replenished, he added.
Mickoski said the government is monitoring the situation closely and is seeking to prevent the fuel price rise from quickly feeding into higher prices for other goods.
He said he would meet on Wednesday with owners of supermarket chains in the country to urge them not to pass the pressure of higher fuel costs directly onto consumers.
“I will ask them not to use this pressure to immediately increase prices and transfer the burden onto citizens’ consumer baskets,” Mickoski said.
He added that he expects businesses to act fairly toward consumers so the government can maintain a balanced approach toward the private sector while protecting living standards.
“I hope it will not come to a point where the government needs to introduce other, more offensive measures,” he said.