Oil Terminal Strikes Cut Fuel Supplies in France
Striking workers in France have set up blockades at oil terminals in multiple ports and at all eight of the nation's refineries, disrupting so much production that nearly a quarter of the nation's gas stations have run out of fuel to sell.
Traders say that queues of tankers have formed off Le Havre, where Total's Gonfreville and Exxon's Port Jerome facilities are located. Gonfreville, at 250,000 barrels per day, is France's largest refinery.
"The strike at the port of Le Havre will limit the intake of cargoes and might cause some cargoes to stay afloat, but once the strikes are over, there should be some supportive impact on the cargo market as inland stocks will need to be rebuilt," said oil analyst Olivier Jakob of Petromatrix.
Traders told media that so far, cargoes have not been rerouted to other ports; however, they noted that demurrage charges for charterers of delayed ships will begin to rise. Oil prices have not been affected, but refining margins have risen to their highest level since late last year – raising profits for other European refiners, but also raising costs to drivers.
Total CEO Patrick Pouyanne told media that the firm may revisit its investment plans in France if disruptions continue. "If our colleagues want to take an industrial asset hostage for a cause that is foreign to the company, you have to ask whether that is where we should invest," he said.
The strikes come just a few weeks before the Euro 2016 soccer tournaments, and France expects as many as a million visitors. "There will likely be an import pull for diesel cargoes during June and July" to ensure sufficient fuel supplies during the event, says Jakob.
LNG terminal operator Elengy said Tuesday that its three facilities had also been blockaded and would not be operating until Wednesday at the earliest.
The French transport union CGT has organized the protests as a way to demonstrate against the government's labor market liberalization reforms, which will make it easier for employers to set wages and hours and lay off employees.
France's Prime Minister Manuel Valls said that the labor laws would not be changed and that the demonstrations would be countered with police action. "It's unbearable to see this sort of thing," he told French media. "The CGT will come up against an extremely firm response from the government. We'll carry on clearing sites blocked by this organization."