French industrial strikes limit fuel supply, hit crude prices

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PARIS, March 28 (Reuters) - Industrial action over the past three weeks has seen every French refinery debilitated to some extent, hindering fuel deliveries throughout the country and depressing European crude prices as market players look to sell.

The action is part of a nationwide movement against pension system changes championed by President Emmanuel Macron, including raising the retirement age by two years to 64.

The shut-in of French refineries has weakened crude oil markets in Europe. The absence of French demand has increased supplies of crude grades from the North Sea, west Africa and blends from the Caspian pipeline, according to traders.

"It's a pretty bad situation," one of the traders said.

This comes as the refining sector enters its 21st day of industrial action, which has stopped production at three of France's biggest refineries and forced two others to operate at reduced capacity. The other two French refineries have been offline for repairs.

The strike is tightening supply of refined oil products such as diesel and gasoline. In a sign of supply concerns, the spread between the prompt and second month ICE low-sulphur diesel contracts remained high at around $21 per tonne, known as a backwardation.

Gasoline refining margins rose on Friday to their highest since October at around $23 per barrel.

About 17% of all fuel stations throughout the country were missing at least one product as of Monday night, France's petroleum association UFIP said, citing French energy ministry data. The national number was around 30% during last October's strikes.

The rate of missing stocks is always higher coming out of the weekend and is set to improve from Tuesday, UFIP added.

Currently, no workers are being ordered to keep deliveries flowing from French fuel depots, an energy ministry spokesperson said. The government is monitoring the situation every hour, they added.

Requisition orders were put in place over the weekend at the TotalEnergies' Gonfreville and Donges refineries to supply the Ile-de-France region, which includes the capital city Paris, and Brittany. Both regions have about 29% of fuel stations missing at least one product, ministry data showed.

A similar requisition order was in place last week for shipments from the Fos-sur-Mer depot to supply a southern region with 28% of fuel stations lacking at least one fuel. Another southern region had 24% of fuel stations without a fuel.

The French energy ministry, which provided the information, did not say on Tuesday whether any requisitions had been or would be renewed this week.

The strikes have also caused disruptions for airlines.

France's civil aviation authority DGAC asked carriers to cut flights from Paris-Orly by a fifth on March 30 and by a quarter on March 31.

Airlines have previously had issues receiving jet fuel kerosene as the depots that deliver it have been blocked.

"We did see a big negative impact (with jet fuel) last week, but this week it's going to turn as Le Havre is opening up," one trader said.

Additional reporting by Sudip Kar-Gupta and Rowena Edwards and Ahmad Ghaddar in London; Editing by Alex Richardson, Bernadette Baum and Tomasz Janowski

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