European fuel margins remain firm under ongoing global supply risks

While the world faces fuel supply crunches, European fuel margins remain firm. Ongoing supply risks have emerged that pose a significant threat to the global supply of diesel and gasoline. Despite efforts to transition the global energy industry to the renewable energy sector, traditional gasoline and diesel production remains firm, especially in Europe. Global fuel supply has faced an uncertain future, thanks to the ongoing war between Ukraine and Russia. The resilience of the transport fuel sector is a promising sign that the sector can not only survive but potentially thrive in the face of adversity.

Despite global supply risks, stronger gasoline demand in southern Europe and the Mediterranean has emerged

The southern European region, as well as the Mediterranean, has seen gasoline demand rising in recent months, further strengthening the standing of the sector in the global energy industry.

Demand for transport fuel in Europe normally declines as summer ends, but that annual trend has not been evident this year. The International Energy Agency has reported oil demand to increase by just 740,000 b/d this year, down from just under 1mn b/d in 2024.

While Europe is an exceedingly small continent in comparison to the rest of the world, demand for traditional fuel sources has remained firm. Despite the apparent proclivity for oil in Europe, the continent accounted for only 45,000 b/d of this year’s projected growth.

The Russia-Ukraine war has resulted in a decline in demand for Russian oil and gas

The war in Ukraine has ravaged the region, and the world has been forced to face the uncomfortable reality that Russia is not aligning with international calls for peace in the region. The war has affected nearly every aspect of daily life, but there is one factor that the Russian government did not consider, it would seem.

Russia is the world’s second-largest diesel exporter and relies heavily on international interest in its energy sector. Ukraine has less military power than its Russian counterparts, which means it needs to carefully consider which sectors to target for attack.

With that in mind, Ukraine began attacking Russia’s oil refineries through drone attacks, which have negatively affected the Russian energy sector’s ability to produce fuel for its citizens. Since early August, at least 16 of Russia’s 38 refineries have been targeted by Ukraine’s drone attacks, leading to significant problems for fueling stations around Moscow and further afield.

Industry insiders have also pointed to new sanctions being imposed on Russia by the European Union that further exacerbate the problems for the oil-rich nation. The world could turn to the Gulf region to supplement the reduction in transport fuels from Mother Russia. Despite all these problems, the sector remains strong, according to forecasts from industry experts.

Analysis from industry experts has noted that Russia’s problems will compound if the current trend continues. As the war has no end in sight, the evidence suggests that the problems will persist. Europeans can take solace in the fact that the fuel margins in their region remain firm, despite the myriad of issues that the sector faces.

“Russia’s seaborne crude oil revenues have declined for the third consecutive month, reaching their lowest levels of 2025.” – Centre for Research on Energy and Clean Air analysis

Europe needs to fast-track the transition to the renewable energy sector

While one can understand that fuel imports remain high in Europe, the overarching consensus is that more needs to be done to fast-track the adoption of the renewable energy sector. Fuel margins remain consistent in Europe despite a litany of problems, but if the European fuel sector aims to diversify, more work will need to be done to deviate from the Russian energy supply. The energy-rich nations of the world have called for more balance in the energy sector as demand rises across the globe.