FUTURE DEVELOPMENTS Signal Radar 2025–2030:
Five indicators shaping Europe’s refining future and the global base oils market
Based on a presentation given at the Argus Global Base Oils Conference, 4 February 2026, by Benedict George, Editor, European Products, and Guo Harn Hong “Marc”, Global Lead, Base Oils, Argus Media
Benedict George
Guo Harn Hong “Marc”
Europe’s refining industry is entering a decisive era of change. As demand softens, costs rise, and green policies accelerate, the region is moving beyond its peak oil moment, forcing refiners to adapt or exit. From capacity closures to shifting fuel patterns and emerging global competition, this analysis highlights the key signals shaping the future of refining and the evolving base oils market through 2030.
Europe’s refining sector: Moving downhill from peak oil Europe is facing a long-term drop in oil demand as economic shifts, green transition policies and high operating costs are putting pressure on traditional refining margins. According to Argus’ analysis, the region is now firmly past its period of peak oil, and refiners are being forced to adapt.
Industrial slowdown, particularly in sectors such as chemicals, metals, automotive manufacturing and construction, has led to lower demand for key feedstocks like diesel, naphtha and LPG. As industrial production migrates to regions with lower energy costs and looser regulation, European demand continues to soften.
Global political tensions are also increasing the pressure on refiners. Tighter emissions legislation, the EU Emissions Trading Scheme (ETS), and the upcoming Carbon Border Adjustment Mechanism (CBAM) are adding costs to an already strained sector. While CBAM could eventually level the playing field, oil products will not be included in its early phases, leaving refiners vulnerable in the short term.
Closures accelerate as refining capacity tightens One of the most significant trends since 2024 is the rapid closure of nearly 500,000 barrels per day of refinery capacity, which has removed much of Europe’s
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historical spare margin. Import supply has struggled to catch up, sending diesel stocks in northwest Europe to critically short levels during summer 2025.
Argus’ refinery closure research highlights clear patterns in vulnerability: • Inland refineries in net exporting countries have the highest closure rates.
• Plants lacking complexity (e.g., no hydrocracker or fluid catalytic cracking (FCC) ability) are disproportionately affected.
• Small scale refineries (<100,000 b/d) face rising economic pressure.
• Sites built before 1960 or those with recent ownership changes also show elevated risk.
Despite many closures expected in 2025, 2026 may see a temporary pause, but long-term structural decline points to the fact that further shutdowns are almost a certainty.
Demand divergence across Europe While western Europe sees falling demand, the pattern across the continent is increasingly uneven. Countries such as Spain, Poland and Turkey display stronger macroeconomic growth, supporting higher fuel consumption and helping to sustain their refining sectors. Notably, these countries have avoided the widespread closures affecting their western European peers.
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