Defense Spending Increased European Fuel Demand
Rising defense budgets and decreased refining capacity created new energy security challenges in 2025.
Updated on Oct. 1, 2026 in Oil and Gas
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European Union defense spending reached 418 billion euros in 2025, marking a 75 percent increase since 2021. This surge in military activity boosted demand for diesel and jet fuel while refining capacity remained constrained.
Why it matters
Governments now prioritize fuel supply resilience over previous refinery closure strategies to support military readiness. Additionally, the region requires more energy to sustain a competitive edge in artificial intelligence development.
European refining capacity dropped from 17.5 million barrels per day in 2009 to 14.4 million in 2025 following the closure or conversion of 30 refineries. Meanwhile, companies like VARO Energy maintain a refining capacity of 530,000 barrels per day.
The players
VARO Energy
This energy company operates refineries in countries including Germany and Sweden and manages a capacity of 530,000 barrels per day.
The details
Refineries are essential to produce the specific diesel and jet fuel required for military assets like tanks and fighter jets. With 30 of the original 100 refineries closed since 2009, the European energy sector faces significant pressure to meet the requirements of expanding national defense plans.
Timeline
European refining capacity measured 17.5 million barrels per day in 2009.
Defense spending increased by 75 percent since 2021.
Russia invaded Ukraine in 2022.
EU defense spending hit 418 billion euros in 2025.
US retail diesel prices reached 6.50 dollars per gallon in October 2026.
Market Landscape
The current energy supply situation follows the strategic requirements set by the European Union national defense plans. This shift marks a departure from the historical trend of consolidating refining assets toward a model that prioritizes state-level energy security.
While the primary impact relates to military fuel supply, the tightening of energy capacity affects global market costs. Consumers may see indirect price fluctuations in transportation fuels, similar to the US retail diesel prices seen in 2026.
The takeaway
Energy security is increasingly tied to military and technological capability rather than just civilian demand. Policymakers and industry leaders must balance the economic necessity of refinery closures with the strategic need for fuel autonomy.
Further reading
For more on energy infrastructure trends, visit the Oil and Gas section.
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Do you expect rising military fuel demand to lead to higher energy costs for your household?
