Key insights
- The French Energy Ministry is exploring increasing oil refining capacity to mitigate the impact of the Iran conflict on energy prices, particularly diesel. While no immediate supply disruption is expected, market tension exists due to the closure of the Strait of Hormuz. This could lead to higher energy costs globally, indirectly impacting US equities through inflation and economic slowdown.
PARIS, March 23 (Reuters) - The French Energy Ministry has started evaluating the possibility of increasing the capacity of the country’s five oil refineries in a bid to soften the impact of the conflict in Iran on energy prices, it said on Monday.
The ministry is particularly looking into fuel and diesel, it said.
"There is no risk of supply disruption. However, there is market tension, particularly evident in the sharper rise in diesel prices compared to gasoline prices," the ministry told reporters.
France imported about 50% of its diesel consumption before the start of the war, it said.
Prices and supply of crude oil and refined products have become extremely volatile after Iran effectively closed the key Strait of Hormuz, through which about a fifth of global oil and liquefied natural gas flows, in response to strikes by the U.S. and Israel.