European refiners may face tighter crude supply options and higher compliance risks under the European Union’s Methane Emissions Regulation (EU MER), which takes effect for imports on Jan. 1, 2027.

The regulation, in force since August 2024, requires importers of crude oil, natural gas, and coal to demonstrate that upstream producers meet monitoring, reporting, and verification (MRV) standards equivalent to EU requirements or align with Level 5 of the United Nations (UN) Environment Program’s Oil and Gas Methane Partnership (OGMP 2.0).

“The combination of a narrower choice of crudes and tougher compliance obligations could complicate existing operational constraints arising from crude specifications, logistics, and arbitrage economics, and European refiners could face additional operational, financial and legal challenges next year,” the International Energy Agency (IEA) said.

Based on OGMP 2.0 data, IEA estimates that around 22.5 million b/d of global production will satisfy Level 5 criteria in 2027. However, not all of these barrels will be available to Europe due to export constraints and unfavorable arbitrage. As a result, IEA expects that the pool of tradable crudes accessible to EU refiners could shrink by more than 50%.

Uncertainty over implementation adds further risk. Key details on traceability and certification remain unresolved, while no EU-accredited third-party verifiers are currently available to validate MRV compliance.

“Hence, even if a company produces crude oil at OGMP 2.0 Level 5 standards, it is currently not possible for it to have its compliance verified with the EU MER. This creates legal and compliance complexities for EU crude importers, and here again, guidance is required from EU member states, the European Commission, and EU accreditation bodies,” IEA said.

Logistical realities further complicate compliance. The commingling of crude in pipelines and terminals makes traceability difficult, particularly for North American exports, which accounted for 23% of EU crude imports in second-quarter 2026.

“Even if these hurdles are overcome, available compliant crude oil volumes in aggregate may not be sufficient to meet the crude quality requirements of EU refineries,” IEA said.

For example, many heavy crude suppliers suited for coking and asphalt production—such as Mexico, Venezuela, and Iraq—are unlikely to comply, while some Level 5 producers have limited trade flows to Europe.

A narrower crude slate and higher compliance costs could pressure refinery margins or force suboptimal crude runs. Lower refinery throughput could increase EU reliance on refined product imports, which are not subject to EU MER restrictions, potentially weakening EU refining competitiveness and raising longer-term energy security concerns, according to IEA.