Europe’s shrinking oil-refining industry is seeing stronger fuel demand as governments increase defense spending and focus on supply resilience. European Union member states’ defense outlays rose for the 11th consecutive year in 2025 to €418 billion ($472 billion), up 75% from 2021, with further increases forecast for this year. VAROPreem CEO Dev Sanyal said governments now recognize the need for additional fuel and energy, including to support Europe’s competitive ambitions in artificial intelligence. Since 2009, 30 of roughly 100 European refineries have closed or been converted, including at least seven transformed into biorefineries, reducing capacity to produce diesel, gasoline and jet fuel across the European Union, Britain, Norway and Switzerland. Regional refining capacity across EU countries, Britain, Turkey, Ukraine and Switzerland fell to 14.4 million barrels per day last year from 17.5 million bpd in 2009. Diesel prices have also surged after the Iran war disrupted key shipping lanes and attacks on Russian refining infrastructure continued. European diesel futures exceeded $14 a metric ton, while U.S. retail diesel prices reached a record $6.50 per gallon this month.