France set to secure an extra 295,000 metric tons of diesel a month from Gulf countries (updated)

TotalEnergies SE

Yesterday 16:20

Promise of extra fuel follows French president's visit to the Gulf
Diesel prices have added to popular anger over living costs
Analysts say extra diesel is unlikely to lower prices significantly
Changes dateline, adds context, details
By Benoit Tessier and John Irish
RIYADH/PARIS, Oct 21 (Reuters) - Saudi Arabia has agreed to deliver to France additional quantities of diesel for "as long as necessary," the French presidency said on Wednesday after officials said they expected Gulf countries to provide an extra 295,000 metric tons a month of the fuel.
A global shortage linked to the disruption caused by the US-Israeli war with Iran has led diesel prices to hit record highs, stoking inflation and adding to popular discontent in many countries, including France, where protests have turned violent.
President Emmanuel Macron, whose country will elect a new leader in six months time, made a three-day visit to the Gulf this week, which he told a national television address on Sunday was aimed at securing France's energy supplies. 
Macron ended his tour on Wednesday in an unscheduled stop to meet Saudi Arabia's Crown Prince Mohammed bin Salman in Riyadh.  
A French presidency official told reporters on Tuesday that Western Europe's second-largest diesel consumer will get an additional 95,000 tons per month for October and November from Saudi Arabia, and 100,000 tons per month from the United Arab Emirates, 
A further 100,000 tons per month was also expected to come Bahrain, the official said.
"An agreement was reached with the Saudi authorities to extend, for as many months as necessary, the additional diesel volumes they had agreed to provide in order to guarantee our country's fuel supply," the French presidency said in a statement. 
The presidency did not specify if it was referring to the same 95,000 tons a month previously agreed.  
Speaking to reporters on Tuesday, the French presidency official said TotalEnergies TTEF.PA would sign a contract with Bahrain's state-owned oil company BAPCO for a further 100,000 tons per month.
     
LIMITED IMPACT ON PRICES
The official said the total secured this week would amount to just over 10% of diesel consumption in France, with further discussions continuing for the subsequent months.
Analysts said the new supplies were unlikely to reduce prices significantly. 
They add, however, to the release of 10 million barrels of diesel from France's strategic reserves earlier this month, which the government had said could lead to a reduction in prices of an amount ranging from 0.12 euros ($0.1347) to 0.18 euros. 
Market watchers and analysts have also said that President Donald Trump's deal with Russia to supply diesel to US and global markets is unlikely to meaningfully lower diesel price as the promised volumes are too small to ease the global shortage.
The French presidency statement also said Riyadh had welcomed France’s help in protecting its critical energy infrastructure in Yanbu.
France pledged in September to send air defence systems to help protect oil facilities in the face of attacks from Yemen's Iran-aligned Houthi movement.
($1 = 0.8910 euros)

 (Reporting by John Irish and Benoit Tessier; Writing by Dominique Patton, Charlotte Van Campenhout, Editing by Barbara Lewis)
 ((dominique.patton@thomsonreuters.com))