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Europe Refinery Runs Seen Rising in 2026, Fuel Demand Weakens, Kpler Says

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Europe's refinery runs are set to rise in 2026, but high fuel prices are weakening demand and widening the supply-demand gap, Kpler strategists said in a note on Wednesday.

European refineries should average 12.2 million barrels per day in 2026, up about 130,000 b/d from 2025, as margins remain healthy and maintenance stays light.

Kpler expects Q4 runs to average 12.45 million b/d, compared with 11.93 million b/d in Q4 2025 and a five-year average of about 11.4 million b/d.

A lighter turnaround schedule is driving the strong Q4 run rates rather than postponed maintenance, while IIR data shows little significant rescheduling despite geopolitical events.

Major refinery turnarounds often require years of planning, while safety rules and limited specialist labor and contractors make significant schedule changes difficult, Kpler said.

European refined product demand should fall about 150,000 b/d over the year in 2026, reversing an earlier forecast for broadly flat consumption.

Diesel accounts for most of the deterioration in demand, with the latest forecast showing a 190,000 b/d annual decline versus an earlier estimate of about 50,000 b/d.

European diesel demand plunged 460,000 b/d over the year in Q2 as higher prices and unfavorable base effects weighed heavily on consumption, Kpler said.

Average diesel prices across the five largest EU economies rose about 30% over the year in April-May amid the US-Iran conflict, while Q2 2025 demand had increased about 120,000 b/d.

Panic buying ahead of the escalation lifted March 2026 diesel demand, setting up a sharper pullback in April, while prices briefly eased in June and early July after the ceasefire.

Diesel prices began climbing again in mid-July as geopolitical tensions returned, keeping Q3 demand under pressure, with consumption expected to decline by about 180,000 b/d over the year.

Gasoline demand should grow about 20,000 b/d in 2026, down sharply from roughly 100,000 b/d growth in 2025 as higher prices limit consumption despite resilient road mobility.

Jet fuel demand has held up better, with Kpler forecasting a 42,000 b/d increase in 2026, broadly matching its pre-war outlook despite initial concerns over tighter supply.

Europe adapted to the loss of about 400,000 b/d of Middle Eastern jet fuel supply by increasing US and Nigerian exports and raising European refinery yields.

Naphtha demand should rise by about 10,000 b/d in 2026 as higher steam-cracker operating rates and the return of facilities support consumption, while tighter Asian supply improves European cracking economics.

Kpler sees downside risks to its demand outlook, warning that prolonged elevated diesel prices could trigger further downward revisions to European diesel consumption.

Strong refinery utilization and weaker demand should lengthen Europe's core refined product balances over the year versus 2025, with light maintenance supporting higher output and availability, Kpler said.

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