Refining in Europe fuel oil is regaining importance due to increased defense spending and the need to guarantee the supply of strategic fuels. After years of refinery closures and conversions, European governments are paying closer attention to the availability of diesel, gasoline, and aviation fuel. Dev Sanyal, CEO of VAROPreem, noted that current discussions with European governments are increasingly focused on energy resilience and continuity of supply. This shift in priorities coincides with a significant increase in defense budgets. In 2025, European Union member states increased their defense spending to €418 billion ($472 billion). This figure represents a 75% increase compared to 2021, and further increases are expected this year.
Refining in Europe faces reduced capacity
However, the increased potential demand for fuels comes after years of shrinking the continent’s refining infrastructure. Since 2009, some 30 of the approximately 100 refineries operating in Europe have closed or been converted, according to data from FuelsEurope. At least seven facilities have been converted into biorefineries.
As a result, the available capacity to produce derivatives such as diesel, gasoline and decreased aviation fuel in the European Union, the United Kingdom, Norway, and Switzerland. Data from the Energy Institute’s Statistical Review of World Energy illustrate the magnitude of the adjustment. Refining capacity in the European Union, the United Kingdom, Turkey, Ukraine, and Switzerland stood at 14.4 million barrels per day last year, down from 17.5 million barrels per day in 2009. This represents a reduction of 3.1 million barrels per day compared to the level recorded more than a decade ago and reflects the transformation that the European refining sector has undergone.
VAROPreem focuses on security of supply
For his part, Sanyal believes that government priorities have changed, between 2015 and 2022 much of the attention was focused on closing refineries, while now the discussions are concentrated on ensuring resilience and continuity of supply.
Every conversation I’m having with European governments these days is about how to maintain resilience, how to maintain continuity of supply
Sanyal
VAROPreem, based in Switzerland, has approximately 530,000 barrels per day of capacity through its refineries located in Sweden, Switzerland and Germany. In addition, Sanyal linked the new energy demand to defense needs and to the European objective of strengthening its competitiveness in areas of high energy consumption such as artificial intelligence. In this scenario, the availability of liquid fuels again acquires a strategic dimension for governments.
Conventional fuels maintain their role in defense
The military sector continues to rely on petroleum products for a large part of its operations, equipment such as the US-made F-35 fighter jets and Leopard tanks require conventional fuels.
Now, with defense spending, you realize that if you have F-35s, if you have Leopard tanks, they don’t run on biogas.
Sanyal
This dependence coincides with a smaller European refining infrastructure than existed in 2009, therefore, the increase in military needs opens a new debate about how much leeway Europe has to guarantee supply in the face of possible disruptions. Added to this is the usual demand from transport, aviation, and other economic activities that also depend on refined products.
Diesel adds pressure to the fuel market
Likewise, the diesel market the oil sector is experiencing a period of intense pressure. Disruptions to major shipping routes related to the war in Iran and attacks on Russian refining infrastructure have affected the international market balance. This situation is further complicated by Europe’s smaller refining capacity. A less extensive network of refineries leaves less room to respond quickly to supply disruptions or unexpected increases in demand.
European diesel futures have risen sharply since the start of the conflict as logistical difficulties and problems at Russian facilities add strain to the international fuel supply. In the United States, retail diesel prices reached a record high of $6.50 per gallon this month. At the same time, Washington has increased pressure on Europe to release diesel stockpiles, according to sources cited in the reports analyzed.
Europe reconsiders the role of its refineries
Thus, the debate surrounding European refineries is shifting, the capacity reductions developed over the years now coincide with increased needs related to energy security, defense, and continuity of supply, the evolution of military spending adds another variable to a market already facing geopolitical tensions and changes in international fuel flows.
For the refining sector in Europe, this scenario presents a significant operational challenge meeting growing strategic demand with infrastructure that has been losing capacity for over a decade, the availability of diesel, gasoline, and aviation fuel will remain a key factor in determining how the European market responds to further supply disruptions.
Source: Hydrocarbon Processing
Photo: Shutterstock
