Europe’s refinery runs strengthen in 2026, but demand struggles under elevated fuel prices

Europe’s refined product market faces a widening supply (production)-demand divergence in 2026. A light maintenance season is supporting some of the strongest Q4 refinery runs since 2019, while high fuel prices and geopolitical disruptions weigh on demand. This is expected to lengthen Europe’s core product balances versus 2025. Diesel bears the brunt of the slowdown, while jet fuel and naphtha remain relatively resilient, supported by alternative supply (US, Nigeria), yield shifts and stronger petrochemical economics.

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European refinery supply: lower maintenance supports strong 2026 runs

European refinery runs are expected to average 12.2 million b/d in 2026, around 130 kbd higher y/y, supported by healthy refining margins and a relatively light planned maintenance schedule.

Europe’s refinery runs (kbd) 

Source: Kpler

Runs are expected to remain strong through Q4, averaging around 12.45 mbd versus 11.93 mbd in Q4 2025 and a five-year average of around 11.4 mbd, putting throughput among the strongest Q4 levels since 2019. This is largely due to a lighter turnaround cycle rather than maintenance deferrals, with IIR data showing little material rescheduling despite recent geopolitical developments. Major turnarounds are typically planned years and are difficult to shift due to mandatory safety requirements and limited availability of specialised labour and contractors. Combined with healthy margins, this should keep European refinery runs elevated through year-end.

European refined product demand weakens in 2026

Europe’s demand outlook has weakened materially since the start of the year. In our latest forecast, we expect total European refined product demand to contract by around 150 kbd y/y in 2026, compared with broadly flat demand anticipated in our pre-war February outlook. The losses are concentrated in Q2 2026 and, product-wise, it’s in diesel, while gasoline demand growth has also slowed considerably. In contrast, jet fuel demand has proved more resilient, while the demand outlook for naphtha has improved.

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Refined product demand growth (y/y, kbd)

Source: Kpler

Diesel: Diesel has seen the largest deterioration in the European demand outlook. At the beginning of the year, we expected demand to decline by around 50 kbd y/y in 2026; our latest forecast now points to a much steeper contraction of approximately 190 kbd, including a 460 kbd y/y decline in Q2.

The Q2 weakness reflected both elevated prices and base effects. The US-Iran conflict pushed average diesel prices across the EU-5 around 30% higher y/y in April-May, weighing on consumption, while the comparison was amplified by a strong Q2 2025, when demand increased by around 120 kbd y/y. Panic buying ahead of the escalation also boosted March 2026 demand, contributing to a sharp pullback in April.

Prices briefly eased in June and early July following the US-Iran ceasefire, but began rising again from mid-July as geopolitical tensions resurfaced. Demand is therefore expected to remain under pressure in Q3, declining by around 180 kbd y/y. Notably, this comes on top of an already weak Q3 2025, when demand fell by around 150 kbd y/y, taking consumption to a five-year low for the quarter.

Gasoline: European gasoline demand is expected to increase by around 20 kbd y/y in 2026, a sharp slowdown from growth of approximately 100 kbd in 2025. Higher gasoline prices across Europe have weighed on consumption, limiting demand growth despite continued resilience in road mobility.

Jet fuel: In contrast, European jet fuel demand has proved considerably more resilient than initially feared and is expected to increase by around 42 kbd y/y in 2026, broadly in line with our pre-war forecast. Earlier in the conflict, we expected tighter supply to constrain European jet demand. However, Europe’s jet fuel market has adapted relatively quickly to disruptions through the Strait of Hormuz.

Despite the abrupt loss of around 400 kbd of Middle Eastern supply into a structurally short European market, alternative supply sources and refinery adjustments have offset a substantial share of the disruption. Higher exports from the US and Nigeria’s Dangote refinery, alongside elevated jet yields at European refineries, have helped compensate for the loss of Middle Eastern barrels.

Naphtha: European naphtha demand has remained relatively resilient in 2026, with consumption expected to increase by around 10 kbd y/y. The strength has been supported by higher steam-cracker operating rates as several facilities returned from outages and maintenance. Reduced Asian supply has also improved European cracking economics, supporting higher utilisation rates and naphtha feedstock demand.

Risks remain skewed to the downside

Our current demand forecast incorporates the latest crude-price and diesel-crack assumptions. However, risks remain skewed to the downside. If elevated diesel prices persist for longer than currently anticipated, European diesel demand could face further downward revisions.

European refined product balances to lengthen in 2026 as strong refinery runs contrast with weaker demand

With European refiners maintaining high utilisation rates despite the headwinds from the US-Iran conflict, while elevated fuel prices weigh on end-user consumption, Europe’s core refined product balances are expected to lengthen in 2026 compared with 2025. A relatively light refinery maintenance year is supporting higher throughput and product availability, even as the demand outlook has deteriorated, particularly for diesel.