• EU’s Oil Coordination Group met Tuesday and said physical oil-product supply remains stable, with no immediate shortfall.
  • Refineries are running near maximum capacity to meet demand, but diesel and jet-fuel prices stay unusually high due to geopolitical risks and seasonal factors.
  • Commercial and emergency inventories are adequate, yet the Commission warns that Middle East instability and autumn/winter demand could tighten markets further.

Supply Stable, But Middle Distillates Under Pressure

The European Union’s Oil Coordination Group convened on 29 September and concluded that physical oil-product supply across the bloc remains stable, even as diesel and jet-fuel prices continue to trade at unusually high levels. The group, which includes representatives from the European Commission, EU member states, industry, the International Energy Agency (IEA), the Energy Community, and NATO, found no immediate oil-supply shortfall. However, the pressure is concentrated in middle distillates—particularly diesel and jet fuel—rather than an outright shortage of crude oil.

“Refineries are running at near-maximum capacity and responding well to market signals,” the Commission said in its assessment, according to people familiar with the matter. Higher EU refinery runs and replacement imports from global suppliers have so far met demand, but the Commission explicitly flagged the unstable Middle East situation and normal autumn/winter demand patterns as factors that could further tighten diesel and jet-fuel markets in the coming weeks and months.

Refinery Utilisation Near Peak, but Flexibility Limited

EU refineries are operating close to maximum capacity, lured by elevated refining margins for diesel and jet fuel. While this improves near-term economics for operating plants, it leaves little spare capacity for maintenance outages or unplanned disruptions. The Commission’s planning documents note that refinery capacity is geographically concentrated and that alternative refined-product supply can be limited—especially for jet fuel.

This follows earlier efforts in 2026 to offset disruptions associated with Middle East instability and the Strait of Hormuz. In June, the Commission said trade flows were only slowly recovering after a US–Iran memorandum of understanding, and that replacement imports plus higher EU jet-fuel output had mitigated the effect of reduced regional flows. The structural exposure is especially acute in aviation: the Commission has estimated that about 40% of EU jet-fuel consumption is imported, and roughly half of those imports pass through the Strait of Hormuz.

Inventory Buffers Adequate, but Risk Premium Persists

Commercial and emergency inventories remain sufficient, according to the group’s central finding. The Commission has been developing stronger coordination around oil-stock releases, refinery utilisation, and transport-fuel availability, particularly for diesel and aviation fuel. Key policy responses include coordinating national and EU-level releases of strategic oil stocks if required, mapping refinery capacity, creating a Fuel Observatory to track production, imports, exports, inventories, and refinery capability, and working with fuel suppliers, airports, airlines, EU countries, the IEA, and other partners to secure alternative jet-fuel supplies.

“The principal risk is that geopolitical disruption and seasonal demand could tighten markets further,” the Commission said. The EU’s assessment is cautiously reassuring: inventories remain sufficient, but the unstable Middle East situation and normal autumn/winter demand patterns could further tighten diesel and jet-fuel markets. This coordination reflects a broader energy-security lesson from recent crises: Europe can face disruption even when it has adequate aggregate volumes, because the crucial issue may be the availability of a specific fuel grade in the right region at the right time.

Market Implications: Higher Costs for Households, Freight, and Aviation

Persistently expensive diesel can raise the cost of driving, home-delivery services, and goods transported by road. Trucking, construction, farming, shipping-related logistics, and diesel-intensive manufacturers face higher input costs that may feed into consumer prices. High jet-fuel prices increase airline operating costs and can pressure fares, route economics, and airport fuel logistics. For refiners, high diesel and jet-fuel margins encourage maximum output, improving near-term economics but leaving little spare capacity.

Fuel-price shocks can lift headline inflation, weaken real household purchasing power, and complicate monetary-policy decisions—especially if elevated prices persist. The short-term base case is continued physical availability, supported by high EU refinery runs, alternative imports, and sufficient stocks. Prices may nevertheless remain high and volatile, particularly for diesel and jet fuel, because pricing reflects marginal supply risk and transport-route uncertainty rather than only current inventory levels.

Downside Risks and Longer-Term Outlook

Main downside risks include a renewed or prolonged disruption in the Middle East or along the Strait of Hormuz, a decline in alternative import availability, winter heating and transport demand adding to diesel pressure, refinery outages or logistics bottlenecks while plants are already running hard, and further stock drawdowns that reduce the market’s resilience. Longer term, the episode strengthens the case for more resilient European fuel systems—better monitoring, more flexible refining and logistics, diversified sources of refined products, strategic inventories tailored to product shortages, and increased domestic production of sustainable fuels.

The key distinction for policymakers, businesses, and consumers is that stable supply does not mean normal prices: Europe currently has enough product, but it is paying a substantial risk premium for diesel and jet fuel while relying on refinery capacity and global supply routes that remain vulnerable to geopolitical developments. The Commission has repeatedly identified geopolitics as a driver of sharp price volatility in crude oil and, more acutely, diesel and jet fuel.

Correction: An earlier version of this article misstated the date of the Oil Coordination Group meeting. It was 29 September, not 30 September.