By Professor Em. Samuel Furfari. Between 1982 and 2018, he was a senior official at the Energy Directorate-General of the European Commission, where he has devoted an entire career to energy technology and policy. He is a Chemical Engineer, having taught energy geopolitics and energy politics at Brussels ULB University (Université Libre de Bruxelles), between 2003 and 2021, where he also obtained his phD, with a thesis in the field of energy.
Having oil is not enough. It must also be transformed, in the right place and in the right proportions, into gasoline, diesel, jet fuel and other petroleum products. Yet this is precisely the industrial capacity that the European Union has allowed to shrink over the past fifteen years. The shock now caused by Ukrainian attacks on Russian refineries is a reminder of an elementary truth of energy policy: industrial capacity that has been dismantled cannot be rebuilt in a matter of months.
A rising price sends a message: the balance between supply and demand has tightened. For motor fuels, that balance depends not only on the amount of crude oil available, but also on refining capacity, refinery utilisation rates and, above all, the ability of refineries to produce the particular fuels the market requires.
The EU once possessed a substantial refining industry.
This contraction had several causes: falling European demand, competition from newer and often larger refineries in the Middle East and Asia, differences in energy costs, and the excess capacity that existed in the early 2010s. But it would be equally wrong to ignore the political factor. Why would an industrial company invest hundreds of millions—or even billions—of euros in an asset designed to operate for several decades when political leaders are simultaneously announcing the scheduled disappearance of its market? Capital prices political risk just as surely as it prices economic risk.
The history is all the more instructive because the European Commission had identified the problem perfectly well. After the collapse of Petroplus in 2012 and a succession of refinery closures, Energy Commissioner Günther Oettinger convened the first EU Refining Forum on 12 April 2013. In 2014, a Commission document estimated that some 1.7 million barrels per day of capacity had been eliminated since 2008 and explicitly warned that further closures would increase the EU’s dependence on imported refined products.
Complaining about diesel prices and the US-Russia deal while eliminating domestic refining capacity and bombing refineries is just another example of bureaucratic hypocrisy.https://t.co/9G64a4z4mL pic.twitter.com/YuAJgEUrE2
— Daniel Lacalle Official Account (@dlacalle_IA) October 11, 2026
In other words, today’s predicament was not unforeseeable. It was foreseen.
Brussels worried about EU refinery closures while gradually creating the conditions that discouraged the investment needed to maintain and modernise them. Companies cannot be expected to invest indefinitely in an activity whose political extinction has already been announced.
The most striking symbol came on 15 May 2023, when Ursula von der Leyen told a European Parliament conference organised by the Greens that a growth model centred on fossil fuels was “simply obsolete”. She did not literally call petroleum products obsolete. But to anyone contemplating a thirty- or forty-year refinery investment, the distinction is largely theoretical.
The problem is not that a political leader expresses a conviction. It arises when public policy alters the economic outlook of an entire sector so profoundly that long-term investment can no longer be justified. That is how external dependence is created: petroleum products continue to be consumed, but fewer and fewer facilities remain capable of producing them at home.
The war in Ukraine has now turned this structural weakness into an immediate problem. Since 2024, and with increasing intensity in 2025 and 2026, Ukraine has attacked Russian oil installations. Refineries, storage facilities and logistical infrastructure have become strategic targets—understandably so in wartime. But the consequences are now considerable, and they extend well beyond Russia.
By late August 2026, according to Reuters, Russian gasoline production had fallen to around 70 per cent of domestic demand. Moscow was forced to limit sales in some regions, increase fuel imports and restrict exports of petroleum products. Russia is one of the world’s major suppliers of refined products, especially diesel. When Russian capacity is temporarily removed from the world market, other refineries must compensate. Their margins rise, and the prices of refined products can diverge sharply from the price of crude oil.
That is exactly what is happening. In early September 2026, the difference between the price of diesel and crude oil—the diesel “crack spread”—approached $80 per barrel in Europe, an exceptional level. In the United States, it exceeded $100 per barrel. This is why the distinction between primary and final energy always matters. Tensions in the Middle East, weak Asian exports and low US strategic stocks have also contributed to the surge. But disruptions to Russian refining and restrictions on Russian exports are undeniably an important part of the problem.
🇪🇺Europe has zero of the world's 15 biggest refineries.
In a diesel crisis, that leaves it with no bargaining power.
🇮🇳India's Jamnagar (Reliance) leads at 1.36M b/d.
9 of the top 15 are in Asia and the Gulf, and 3 of those are in 🇰🇷South Korea.
🇺🇸US has 4.
🇻🇪Venezuela has… pic.twitter.com/wJT2tpiMIP— Jack Prandelli (@jackprandelli) October 4, 2026
Repairs to Russia’s damaged refining system will take months, and perhaps years in some cases. Pump prices are therefore unlikely to return quickly to their previous levels. Relief could come if shipping through the Strait of Hormuz and Gulf exports of crude oil and petroleum products return to normal.
Donald Trump is in a difficult position because Americans react strongly to rising motor-fuel prices. Regular gasoline has exceeded $4 per gallon on average in the United States—nearly 30 per cent more than a year earlier. Such an increase could contribute significantly to the Republicans losing their majority in both the House of Representatives and the Senate in November’s midterm elections.
More seriously for the US economy, diesel has risen to record levels above $6 per gallon. The problem extends far beyond motorists: road freight depends overwhelmingly on diesel, just as aviation depends on jet fuel. Higher fuel prices feed into transport costs, the price of goods and ultimately the entire economy, threatening the growth Trump promised.
Trump has at least understood the role played by the loss of Russian refining capacity. On 13 September, he publicly urged Volodymyr Zelensky to stop attacking Russian diesel refineries, arguing that the strikes were creating a diesel shortage and “hurting the world”. His intervention was a blunt acknowledgement that attacking a major refining system affects not only the country being targeted, but the global market for petroleum products. The Ukrainian strikes are not the sole cause of today’s price surge—the Middle East crisis and disruptions around Hormuz also matter—but their effect can no longer be dismissed.
It is therefore exasperating to hear claims that none of this would have happened had the EU installed more wind turbines and solar panels. As if Europe’s entire vehicle fleet could have been electrified in a few years. In 2024, wind and solar together supplied only about 29 per cent of the electricity consumed in the EU. Even if all electricity were renewable, that would not solve the problem of the diesel required by trucks or the jet fuel indispensable to aviation. How, exactly, would aircraft have flown?
This is why looking only at the price of a barrel of crude is no longer sufficient. The lesson extends far beyond the Russian episode. For decades, before decarbonisation became the overriding goal of EU energy policy, security of supply encompassed both crude oil and petroleum products. Gradually, security of crude-oil supply was pushed into the background, while the security of refined-product supply was largely neglected.
European oil refineries’ margins collapse as input costs soar https://t.co/3AVaDaphB7
— Middle East & Africa (@FTMidEastAfrica) October 14, 2026
A genuine policy of energy security must cover the entire chain: production, maritime transport, ports, pipelines, refining, storage and distribution. A refinery is therefore a strategic asset.
The EU chose the second course while continuing to consume refined petroleum products on a massive scale. It is now discovering the price of that contradiction. Crude oil may be abundant and its price relatively contained; that does not guarantee that gasoline, diesel or jet fuel will also be plentiful or affordable. Between the oilfield and the fuel tank of a car or aircraft stands a heavy, complex and costly industry that cannot be improvised.
Security of supply therefore means more than access to a resource. It also means retaining the industrial capacity to transform it. The EU once understood this obvious truth. The question now is whether the price it is paying will be high enough for it to learn it again.
Selected sources:
– [Reuters: Trump tells Ukraine’s Zelensky to stop hitting Russian diesel](https://www.reuters.com/business/energy/trump-tells-ukraines-zelenskiy-stop-hitting-russian-diesel-2026-09-13/)
– [European Commission: EU Refining Forum](https://energy.ec.europa.eu/topics/oil-gas-and-coal/oil-refining_en)
– [FuelsEurope: Statistical Report](https://www.fuelseurope.eu/publications/publications/statistical-report)
Originally published on the substack page of Samuele Furfari
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