Strike At French Refineries Impacts European Diesel And Crude Oil Markets

Strike at French Refineries:-

Around two weeks have passed since the strike action at the French refinery, and it does not seem to have had a good impact on European diesel and crude oil markets. 

What Has The Strike Already Caused?

The strike, conducted in opposition to the changes in the planned pension system, has caused the crude oil markets to weaken, as well as tightened supply in the European diesel markets. Not only has it induced low outputs at the Normandy and Feyzin refineries, but also led to the blocking of shipments from the Donges and La Mede refineries. Such are the outages that there is increasing apprehension that the coming weeks might witness a tightening of the French and regional supplies of fuels, especially diesel. 

Over the past month, the profitability ratio for refining crude oil into diesel has shot up by nearly 40%. Following this, traders raced to fill up storage tanks in anticipation of the Feb. 5 EU ban on Russian fuel imports, leading to days of rising inventories in northwest Europe. A trader remarked, "The diesel market flipped from feeling long and heavy to short and very backward". Analytics group Kpler show has shared preliminary data suggesting that so far this month France's diesel and gasoil imports have plunged to 173,000 barrels per day (bpd), decreasing by 50% from February and from March 2022.

Impact The Strike May Cause in The Future

In recent months, Europe had to increase substantially imports from the United States, Asia, and the Middle East due to the lack of Russian diesel supplies. The trading sources have predicted the European diesel supply to tighten significantly by April. The International Energy Agency has reported that roughly 8.4% of Europe's total throughput, which is nearly 1 million barrels per day of crude oil, has been processed by France's refineries in January. The strike action has led to an enormous impact on crude oil market, thereby reducing French buying interest.

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