Europe's energy transition, combined with tighter sanctions on Russian oil, is reshaping fuel markets and increasing pressure on aviation supply chains, the International Air Transport Association said in a brief on Wednesday.
European governments are pushing ahead with decarbonization policies to reduce fossil fuel use and expand renewables and bioenergy. At the same time, EU, UK, and US sanctions on Russian oil exports are disrupting established trade flows and adding complexity to global energy markets.
Although Europe has been steadily cutting its dependence on Russian energy, Russia remains a major global oil exporter despite sanctions. Its crude still reaches international markets through alternative routes, including so-called "shadow tanker" fleets and intermediary buyers benefiting from discounted supplies. These workarounds have softened global supply shocks but have not removed market volatility or reduced competition for non-Russian crude.
In Europe, sanctions are compounding an already tightening refining landscape. In 2025, four refineries closed crude processing operations, removing around 400,000 barrels per day of capacity. Longer-term projections from S&P Global Commodity Insights suggest European refining capacity could fall by more than 5 million barrels per day by 2050, nearly half of 2024 levels.
Jet fuel is especially exposed. Unlike many refined products, demand for aviation fuel is expected to remain resilient or grow over the next decade, increasing reliance on imports as domestic output declines.
Airlines are feeling the impact of higher, more volatile fuel costs. Beyond global price movements, carriers face rising logistics fees and supplier premiums that tend to increase in periods of tight supply. At Milan Malpensa Airport, fuel add-ons above base prices have tripled compared with pre-pandemic levels, reflecting constrained local refining capacity.
While refining margins have partially stabilized globally as trade routes adjust, Europe's aviation sector remains particularly exposed due to declining domestic supply and increased import dependence.
IATA warns that without expanded supply diversification, additional storage capacity, and accelerated deployment of sustainable aviation fuels, Europe's airlines will face continued cost pressure, volatility, and heightened vulnerability to geopolitical disruptions linked to sanctions and shifting global oil flows.