How can European refiners thrive in an uncertain world?

Nations and regions increasingly face the challenge of trying to balance three often competing goals: securing a reliable supply of energy from diverse sources; ensuring access to affordable energy; and minimising the environmental impact of energy use.  

As governments try to square the energy circle, the refining sector must be ready to adapt to the new realities to survive. So, what does that mean for European refiners? 

Insights from our keynote at ERTC 2025

At ERTC 2025, Alan Gelder presented “Energy Trilemma – How Can European Refining Thrive in an Uncertain World?”, where he explored the strategic landscape shaping the future of refining in Europe. Below is a snapshot of the key themes from the session.

Global oil demand continues to grow, but at modest levels 

European demand for oil and liquid petroleum derivatives is already falling, thanks to ambitious climate policies, renewables growth and the electrification of transport. Perhaps more surprising is that liquids demand is starting to stagnate in China. While petrochemicals will add demand growth of 0.3 million barrels per day (b/d) in China in 2025, this will be offset by declining demand for road transport, resulting in overall growth of only 0.17 million barrels per day. As a result, by 2027, India will lead global liquids growth at over 0.2 million barrels per day (see chart below). 

2026 will be the floor of European refining margins 

Refining margins in Europe have benefited from low stocks, high maintenance and the impact of Ukrainian drone strikes on Russian refineries in H2 2025. Margins are set to be lower in 2026, before starting to rise again through 2027. However, increasing exposure to the cost of emissions means European refiners will face pressure on their margins in the long term once global oil demand has peaked.   

The critical question: how do you adapt?

To survive and thrive in this evolving environment, competitively weak European refiners will need to pivot away from crude processing, potentially within the next two to three turnaround cycles.

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