As the geopolitical power struggles unfold across the world, the inevitable effect on the energy sector has begun to rise from beneath the deep waters of the market. In light of the complicated market, European fuel margins stay high as supply risks persist in the sector. The European energy market has, for the vast majority of the past decade, relied on fuel imports from Russia. Taking into account the Russian invasion of Ukraine, one could expect the global fuel export sector to shift towards other fuel-rich nations as supply from Russia sinks.
As predicted, the Ukraine war has affected the global fuel market as nations search for alternative suppliers
The world has seen the effects of the Ukraine war come into sharp focus as Russian fuel supply shrinks. In early 2023, the EU implemented a ban on all seaborne imports of diesel fuel from Russia.
That stance towards Mother Russia has been echoed around the world as nations implement bans and set exceedingly high tariffs and sanctions on the nation. A a result, the vast majority of the nations that used to rely on Russian fuel have begun to reach out to alternative fuel producers like those in the Middle East.
The global fuel market has seen significant issues in supply over the past few months. Europe has displayed a proclivity for fuel from the Middle East as well as the United States. While those nations have exceedingly high supply potential, a remarkable shift in the sector means that they are struggling to meet the increase in demand from nations that used to do business with Russia.
Russia’s stronghold on the EU fuel sector has come to an end
Before the ban was implemented by the European Union, Russia accounted for 50% of the region’s fuel supply. As the war unfolded, it became clear that the conflict would last beyond the initial invasion into a long, drawn-out war that would last years. The result is that European distillate imports from Russia accounted for less than 1% of total seaborne imports coming from outside the EU.
Europe has turned to the Middle East to supplement the ofss in imports from Russia
It has emerged that the high-energy usage nations of the world have turned to the Middle East to fill the gap left by Russia in the fuel sector. While nations like the Kingdom of Saudi Arabia and Oman have vast capacity of fuel resources, the increase in demand has resulted in several risks to the supply sector.
The clear geopolitical tension that has emerged in the Middle East can be attributed to Iran’s proclivity to continue working on its controversial nuclear program, leading to concerns for petroleum supply chains from the Middle East to Europe.
The apparent low supply coming from the Middle East has further exacerbated the issues faced by the European Union. Imports from the Middle East accounted for 43% of Europe’s gasoil imports in the first half of 2025. As a result, the EU has turned to local repositories to supplement the short-term needs of the sector, while conflict unfolds in Europe and the Middle East.
The global energy sector will bounce back from the oversupply problems in the distillate import industry
Despite the clear and present danger that war presents to the global energy sector, as evidenced by the Ukraine war, as well as the conflict in the Gaza region, the European fuel margins will remain high. The market will see supply risks that concern industry stakeholders, but the energy sector is an adaptable entity and will find the best solution to meet the continued high energy demand from the world. Over-supply issues that exist in certain regions of the world are a far cry from the apparent market margins in Europe.
