For more than two decades, the UK has quietly seen the foundations of its fuel system erode.
Refineries have closed, domestic production has declined, and imports have filled the gap. For a time, this shift appeared manageable, with stable supply chains and flexible infrastructure.
But the world has changed. The events of 2025 and 2026 have exposed the fragility of this model, revealing just how dependent the UK has become on long, vulnerable supply chains and geopolitical goodwill. The closures of Grangemouth and Lindsey refineries, the Iran conflict, and the resulting fuel price spikes have underscored a simple truth: the UK is now more exposed to global disruption for its fuel than at any point in recent decades.
This is not a comfortable position for a country still reliant on liquid fuels for 47% of its final energy consumption. Nor is it a sustainable one.
A system becoming less resilient, not more
The UK once had nineteen major refineries. Today, it has four. More than 40% of refining capacity has been lost since 2000, including those two significant closures in 2025. The consequences are clear in the data:
- Domestic production now meets less than 70% of diesel demand and around a quarter of jet fuel demand.
- 65% of diesel and jet fuel combined is imported, a structural dependence rather than a temporary imbalance.
- The UK holds only three weeks of diesel and five weeks of jet fuel in stock.
These are not the hallmarks of a resilient system.
The International Energy Agency’s MOSES assessment – the global benchmark for short‑term energy security – shows the UK has moved from a “low‑risk, high‑resilience” position in 2011 to a “high‑risk, low‑resilience” position today for middle distillates. The IEA considers import dependence above 45% on those fuels a “high‑risk low resilience” position. The UK imported 60% of its diesel and kerosene in 2025.
It is a real‑world vulnerability that affects every sector of the economy. Aviation relies entirely on liquid fuels. Road transport relies on them for 97% of its journeys. Rail relies on them for 61%. These fuels underpin supply chains, logistics, emergency services, and everyday economic activity. And while industry’s huge efforts in the last few months to keep the system wet have worked, this time would be better spent preparing for future challenges.
Is the North Sea the answer? Only if we can refine what it produces
In times of energy insecurity, attention often turns to the North Sea. It remains a valuable national asset, particularly for the UK’s gas supply, but it is not a standalone solution to the UK’s fuel security challenges.
In 2024, only 9% of crude processed in UK refineries came from the UK Continental Shelf. Yet the theoretical maximum cover of the current output is higher: UKCS crude could cover 59% of refinery demand. With a supportive investment framework, Offshore Energies UK estimates that North Sea production could double from current government projections.
Yet crude alone is not enough. Without domestic refining capacity, North Sea oil becomes an export commodity rather than a resilience tool, leaving the UK reliant on imported finished fuels.
In 2024, 68% of UK jet fuel imports came from the Middle East and India – supply chains dependent on the Strait of Hormuz.
Why government policy is making it harder for the UK to compete
Despite their importance, UK refineries face higher carbon and energy policy costs than many international competitors, while imported fuels are not subject to equivalent measures. This creates a competitive imbalance that discourages investment, accelerates capacity loss, and increases reliance on imports.
The result is ‘carbon leakage’: UK refining capacity is lost while fuel production shifts overseas to regions with higher carbon intensity. It’s what many call the “illusion of progress” – reducing territorial emissions without materially cutting consumption emissions.
It is policy that has led much of that change. Without a level playing field, the UK will continue to lose domestic capacity, becoming ever more dependent on imported fuels produced in countries with lower environmental standards.
Australia: A case study in domestic capacity loss
Australia’s recent experience is a lesson in over-dependence on imports.
Australia now has only two refineries, covering just 23% of national demand and relying heavily on long supply chains through Asia and the Strait of Hormuz.
When shipments were delayed or cancelled in March, the impacts were more immediate:
- Panic buying and localised shortages
- Petrol prices going up over 40% (after tax) and diesel over 70% at their peak
- Government intervention through tax cuts, reserve releases and even “fuel diplomacy” missions where they have tried to secure fuel products.
The UK avoided the worst impacts, with demand rising 6% during the crisis while supply held. But refinery closures have weakened resilience, with official figures showing production of UK jet fuel – viewed as the product most disrupted by the crisis – down around 15% in the six months to February 2026.
So what now?
The UK is at a tipping point. Without policy adjustment, particularly around carbon costs and the UK CBAM, further refinery closures are likely. With the right framework, however, investment in domestic refining can:
- Reduce import dependence
- Strengthen national resilience
- Improve the UK’s balance of payments
- Provide high‑quality industrial jobs
The UK must decide whether it wants to remain a country that makes the fuels it needs – or one that relies entirely on others to supply them. The events of 2026 have shown that the world is becoming more volatile, not less. In such an environment, sovereign capability matters.
Image credit: FIUK
