After the oil industry suffered from a severe drought in Venezuela, forest fires in Canada and rebel attacks on oil installations in Nigeria, it is now facing the consequences of a national strike in France, where members of the trade union CGT have organized strikes at the country’s refineries and blocked oil terminals and fuel depots, says the Tanker Research & Consulting department at Poten & Partners.
The situation seems to be worsening as more unions join the CGT and clashes break out between protestors and the police. Six out of France’s eight refineries are either shut down or producing at significantly reduced levels.
It is estimated that 40% of the gas stations around Paris and about 20% of the stations nationwide have supply problems. Of the 12,000 gas stations in France, 820 were completely out of fuel last Sunday and another 800 lacked at least one type of fuel according to French transport secretary Alain Vidalies.
The overall fuel supply situation has been exacerbated as consumers fill up their car(s) for fear that the country will run out of gas. What will the impact be on the tanker markets (crude and products) if the strikes continue?
At the moment, the impact on the tanker market is fairly limited, albeit growing. The CGT union has called for port workers to stop work at leading French ports and as the strikes continue, it will be increasingly difficult to supply the country with both crude oil and refined products by sea.
One of the options that remains feasible is supplying France from the Netherlands and Belgium by barging fuel via the river Rhine to Strasbourg in the east of France.
Within France, thegovernment is drawing on strategic fuel reserves to supply gas stations. The last time the French government used its reserves was in 2010 following similar strikes at refineries.
To determine what may happen after the refinery strikes end, it is instructive to review what transpired following the similar labor conflict in 2010. It is important to point out that France had more refining capacity at that time (1.7 million b/d in 2010 versus 1.4 mb/d currently) and consequently needed to import less product.
After the strikes ended in October 2010, there was a 25% increase in refined product imports in the following month. It would not be a stretch to see the same happening this time around.
If the conflict continues into next week and beyond, France will continue to draw on its strategic reserves. With millions of visitors heading to France as it hosts the European Soccer Championship in two weeks, every effort will be made to replenish the stocks of transportation fuels.
Even if the labor conflict ends this weekend, it will take one to two weeks for the refiners to start back up, so it is likely that (similar to 2010) we will see increased product imports with Atlantic Basin product carriers (MR’s mainly) as the main beneficiaries in the short term.