RIO DE JANEIRO/SAO PAULO (Reuters) - A 72-hour strike by Brazilian oil workers halted refineries and rigs on Wednesday, union leaders said, a new blow to President Michel Temer on the heels of a trucker protest that has strangled Latin America’s largest economy for over a week.

The strike by workers demanding changes at state-led oil firm Petroleo Brasileiro SA is the latest challenge for the company known as Petrobras, whose shares have tumbled nearly 30 percent in two weeks over fears that political interference would unwind recent investor-focused policies.

The economic and political storm has shaken the lame duck Temer government ahead of October elections and rattled nerves about the path forward for Petrobras, Latin America’s biggest oil producer.

It has also raised the specter of protests spreading to more sectors as Brazilians vent frustration with the unpopular government and an uneven economic recovery.

With truckers protesting over high diesel prices, government sources told Reuters on Tuesday that Temer had been considering scrapping a market-based fuel pricing policy at Petrobras. But by Wednesday morning the president’s office issued a statement saying he would preserve the policy.

The oil sector strike included workers on at least 25 of the 46 oil rigs Petrobras operates in the lucrative Campos basin, responsible for nearly half of Brazil’s petroleum production. FUP, Brazil’s largest oil workers’ union, said that seven of those rigs were paralyzed. Petrobras did not respond to requests for confirmation.

Petrobras said before the strike that the disruptions would not have an immediate major impact on its output or overall operations. Brazil produces about 2.1 million barrels of oil per day.

According to a source close to the company, Petrobras has a significant stock of fuel on hand, especially as the 10-day trucker protest prevented significant amounts of fuel from leaving refineries.

The truckers’ roadblocks and resulting fuel shortages have halted major industries and hammered exports of everything from beef and soybeans to coffee and cars.

Steelmaker Cia Siderúrgica Nacional SA, Brazil’s second-largest iron ore exporter, declared force majeure for its mining products due to disrupted supplies of diesel, explosives and food to it mines.

The 10-day trucker protest left major cities running short on food, gasoline and medical supplies, and officials warned it would take days to restore supply lines.

The automakers industry lobby Anfavea said car assembly plants halted since Friday will start up again on Monday.

Public Security Minister Raul Jungmann said the numbers of roadblocks that exceeded 1,000 at the height of the strike had fallen to under 200 by Wednesday night.

“Brazil is returning to normal,” he said at a news conference where he accused owners of transport companies of taking part in what he called a “lockout.” The companies have been slapped with 272 million reais ($73 million) in fines.

An oil worker points to a patch on his shirt that reads: "We are not for sale", near the entrance to Petrobras Alberto Pasqualini Refinery, in Canoas, Brazil May 30, 2018. REUTERS/Diego Vara

Moody’s Investor Service warned that it will take weeks for operations to return to normal in sectors from meatpackers and automakers to airlines and retail.

OIL WORKERS TARGET PARENTE

FUP union said workers did not show up to work on Wednesday at 10 refineries stretching from Manaus in the Amazon to Rio de Janeiro in the southeast. They also walked off the job at plants handling lubricants, nitrogen and shale gas, as well as in the ports of Suape and Paranagua.

The oil strike was declared illegal by Brazil’s top labor court late Tuesday, after Petrobras argued it was about politics rather than labor issues. FUP leader Jose Maria Rangel said by phone that the union “will not be intimidated” by judicial decisions, and called the three-day strike a “warning.”

“Our members have already approved us declaring a strike without a fixed end date,” the union said, without providing details on when any longer stoppage may take place.

Unions representing oil workers said they were demanding the resignation of Petrobras’ chief executive, Pedro Parente. They also want the end of the market-based fuel pricing policy and other changes made at Petrobras since Temer took power in 2016.

Petrobras said on Wednesday that board member José Alberto de Paula Torres Lima had resigned, citing “personal reasons.” He was one of three board members recruited by an outside agency and added to the board in April in an effort to establish its independence.

Petrobras did not respond to questions about his departure.

Slideshow (28 Images)

Parente, on a Tuesday conference call with analysts, said Petrobras was taking action so that any strike would have minimal or no impact on production and operations.

The company flexed its muscles a bit by announcing on Wednesday that it would raise gasoline prices at refineries by 0.7 percent starting Thursday.</s>Brazilian oil workers have begun a 72-hour strike on the heels of a crippling nationwide truck drivers' strike that has started winding down after 10 days.

The country's two main oil workers' unions say the strike was called to demand lower fuel prices and the resignation of Pedro Parente, president of state-owned oil company Petrobras.

The strike began Wednesday in defiance of Brazil's top labor court, which declared it illegal and said the unions will have to pay a daily fine of 500,000 reals (about $135,000).

According to the Oil Worker's Federation, the strike has halted production at refineries in six states.

Petrobras said in a statement that contingency teams were operating production units where the strike prevented shift changes from taking place.</s>RIO DE JANEIRO (AP) - Brazilian oil workers have begun a 72-hour strike on the heels of a crippling nationwide truck drivers' strike that has started winding down after 10 days.

The country's two main oil workers' unions say the strike was called to demand lower fuel prices and the resignation of Pedro Parente, president of state-owned oil company Petrobras.

The strike began Wednesday in defiance of Brazil's top labor court, which declared it illegal and said the unions will have to pay a daily fine of 500,000 reals (about $135,000).

According to the Oil Worker's Federation, the strike has halted production at refineries in six states.

Petrobras said in a statement that contingency teams were operating production units where the strike prevented shift changes from taking place.

Workers pedal their bicycles past a banner with a message that reads in Portuguese: "Get out Parente", in reference to Pedro Parente, the president of the state-owned oil company, at the entrance of a Petrobras refinery during a strike in Duque da Caxias, Brazil, Wednesday, May 30, 2018. Brazilian oil workers began a 3-day strike to demand a drop in the price of cooking gas. (AP Photo/Leo Correa)</s>HOUSTON (ICIS)--The Federation of Petroleum Workers (FUP) went on a 72-hour strike on Wednesday, targeting all but three of the refineries of state-producer Petrobras.

The strike will not threaten fuel supplies, the union said.

The general coordinator of the FUP, Jose Maria Range, said that the tanks of the refineries are already full because of a previous nationwide strike by truck drivers, which prevented much of the fuel from leaving the sites.

The following lists the refineries covered by the strike, the union said. Capacity is listed in bbl/day.

Only three Petrobras refineries are untouched by the strike. In addition, Brazil has three small refineries that are not owned by Petrobras and that are not part of the FUP strike.

In addition to the refineries, the FUP strike also covers nitrogen-fertilizer plants in the states of Parana and Bahia as well as terminals and production platforms.

Refineries are important to Brazil's petrochemical industry because it relies mostly on naphtha as a feedstock for its crackers. In addition, refineries produce aromatics and propylene, which can be used as feedstock.

Since most of Brazil's crackers use naphtha, it is less dependent on refineries for these intermediates than the US, where most of the crackers are gas-based.

The union is protesting several recent changes at Petrobras.

It opposes the new pricing policy of the company, which gives it more flexibility.

In the past, the government had more control over fuel prices, and it pressured Petrobras to keep them below international rates. The result gave Brazilians lower prices for gasoline and diesel, but it caused Petrobras to lose millions.

That policy changed in July 2017, and Petrobras has exercised that flexibility to increase fuel prices, in response to a weaker national currency and to higher oil prices.

The FUP also opposes the privatisation of Petrobras. Earlier this year, the company disclosed a plan to sell stakes in four of the country's largest refineries.

The FUP is requesting that Petrobras CEO Pedro Parente leave the company. He became the head of the company in mid-2016.

The union accused Parenteof attending to market interests instead of the needs of the people.

Petrobras did not immediately respond to a request for comment about the union's allegations about Parente.

The union also wants domestic fuel production to increase and for fuel imports to end. While Brazil exports crude oil, its refineries do not produce enough to meet domestic demand for diesel and gasoline.

In a news release, Petrobras said that contingency teams are working when necessary, and the strike has not affected production.

Nonetheless, the nation's Superior Labour Court (TST) had declared the FUP strike illegal, following a request by Petrobras and the attorney general (AGU). They alleged that the union's grievances are political in nature and not labour related.

The TST will charge daily fines of real (R)500,000 ($134,000).

The FUP started its strike just days after the truck union (ABCAM) called an end to its own nationwide strike, which crippled the country.

Brazil relies predominantly on trucks to receive raw materials and distribute finished products because its rail system is paltry.

Polyolefins producer Braskem said it had lowered rates at its industrial units in all of Brazil because of the strike. Other chemical producers, such as AkzoNobel, BASF and Elekeiroz, also reported disruptions because of the strike.

ARLANXEO's plants are running according to the company's monthly production schedule, the company said on Wednesday. Some shipments could face delays because fewer trucks are available and because of leftover highway blockages from the strike.

Solvay Group's Rhodia said on Wednesday that some of its operations are being impacted by the truckers blockading of highways. It has informed customers and is "preparing to regulate recovery of some of its production units and delivery of products, so the transport situation is normalised".</s>Workers pedal their bicycles past a banner with a message that reads in Portuguese: "Get out Parente", in reference to Pedro Parente, the president of the state-owned oil company, at the entrance of a Petrobras refinery during a strike in Duque da Caxias, Brazil, Wednesday, May 30, 2018. Brazilian oil workers began a 3-day strike to demand a drop in the price of cooking gas. less</s>Brazilian oil workers began a 72-hour strike on Wednesday in a new blow to President Michel Temer following a nationwide trucker protest that has strangled Latin America's largest economy for over a week. The strike affecting several rigs, refineries, plants and ports is the latest challenge for state-led oil firm Petrobras, whose shares have tumbled nearly 30% in two weeks over fears that political interference would unwind more investor-focused policies.

The oil sector strike included workers on at least 20 oil rigs in the lucrative Campos basin of 46 operated by Petrobras, as the company is known, according to FUP, Brazil's largest oil workers union. Petrobras said any disruption would not have an immediate major impact on its production or overall operations.

Brazil produces about 2.1 million barrels of oil per day, making it Latin America's largest crude producer.

The oil strike was declared illegal by Brazil's top labor court on Tuesday, after Petrobras argued it was about politics rather labor issues. FUP said it had not been informed of the

 ruling.

According to a sources, Petrobras has a significant stock of fuel on hand, especially as a 10-day protest by truckers prevented significant amounts of fuel from leaving refineries. However, the strike has raised the specter of protests spreading to more sectors as Brazilians vent frustration with an unpopular government and an uneven economic recovery.

The truckers' highway blockades and resulting fuel shortages have already halted major industries and hammered exports of everything from beef and soybeans to coffee and cars.

 FUP said on Wednesday that workers did not show up at work at eight refineries stretching from Manaus in the Amazon to Rio de Janeiro in the southeast. They also walked off the job at plants handling lubricants, nitrogen and shale gas, as well as in the ports of Suape and Paranaguá.

Initial information points to the workers having adhered to the strike at various locations, FUP said in a statement. The movement is continuing through the morning, when stoppages at other Petrobras units are expected.

Unions representing oil workers said they were demanding the resignation of Chief Executive Pedro Parente. They also want the end of a market-based fuel pricing policy and other changes at Petrobras since Temer took power in 2016.

Adding to turmoil at Petrobras, the firm said on Wednesday that board member José Alberto de Paula Torres Lima had resigned, citing personal reasons. He was one of three board members recruited by an outside agency and added to the board in April in an effort to establish its independence.

FUP union leader José Maria Rangel said on Tuesday the Temer government and Parente's policies were delivering Petrobras up to foreign investors, while the shipyards of Rio de Janeiro are closed as unemployment remains near record levels.</s>Brazilian oil workers have walked off the job for 72-hours, just as a crippling nationwide truck drivers' strike is coming to an end.

Employees stopped work on Wednesday, despite the country's highest labour court declaring the strike illegal.</s>RIO DE JANEIRO: Brazilian oil sector workers began a three-day strike on Wednesday (May 30) in at least eight refineries, but were not expected to disrupt fuel supplies as the country started to recover from a devastating truckers' protest.

The strike, which is demanding the resignation of Petrobras oil company CEO Pedro Parente, went ahead despite a ruling by Brazil's highest labor court that it was illegal.

Unions also want an end to state-controlled Petrobras' market-based pricing policy, put in place in 2016 by centre-right President Michel Temer as part of his attempts to open up Brazil's sluggish economy.

"Oil workers are on strike. Those who thought we wouldn't fight against abusive pricing for fuel were wrong," Tezeu Bezerra, coordinator for the Sindepetro Norte Fluminense union in Rio de Janeiro, said in a statement to the workers.

The protest was sparked by discontent over high fuel and cooking gas costs in Brazil, Latin America's biggest economy.

Disruption was expected to be minimal, but unions said a much larger strike may be held next month.

"We can guarantee that these 72 hours will not see supply problems because the refineries have full tanks," the oil workers' federation said in a statement. "This strike is not being held to hurt society but to open a debate."

The federation said that if demands were not met, an indefinite strike could be called in mid-June. "This is a warning strike," it said.

Angered by rising diesel prices, the nation's truck drivers launched their own work stoppage 10 days ago and succeeded in shutting down much of the country's economy.

Supermarkets ran out of fresh food and entire cities were left without functioning gas stations. Even though the truckers' strike is now over, the aftershocks are still being felt through national supply chains.

The oil workers' federation said their strike was being observed at eight refineries and partially at a ninth, with three other non-refinery plants also affected.

The turmoil over the last week has seen Petrobras' share price make wild swings, rising 14 per cent higher on Tuesday on the Sao Paulo exchange, but trading flat on Wednesday.

Markets are concerned that the pressure will prompt Temer to roll back Petrobras' pricing autonomy.

However, Temer's government issued a statement saying it was "committed to the financial health of Petrobras, a company which has recuperated from the serious crisis of the last two years under Pedro Parente's management."

"We will continue to keep the pricing policy at Petrobras," the government statement said.

On Sunday, Temer bowed to pressure from the truckers when he agreed to cut the diesel price by 0.46 reais a litre for 60 days.

Diesel costs had risen from 3.36 reais (US$0.92) a litre in January to 3.6 reais before the strike. On May 26, the price hit 3.8 reais per litre.

Brazil's average oil output was 2.62 million barrels per day in 2017.</s>Brazil's government says it has reached an agreement with the main truck drivers' union to end an eight-day strike.

Fuel and some food items are in short supply as many drivers continue to protest.</s>SAO PAULO (Reuters) - Brazil’s solicitor general’s office and state-led oil firm Petroleo Brasileiro SA said in a joint statement on Tuesday that they were asking the country’s top labor court for an injunction to halt a planned oil workers’ strike.

Unions representing oil workers say they will start a 72-hour strike on Wednesday. That would wreak further havoc on Latin America’s largest economy, already paralyzed by a nine-day nationwide truckers’ strike against an increase in diesel prices.

In a written statement, the solicitor general’s office said the planned oil workers’ strike was “political” and not labor-related, as workers were demanding the resignation of Petrobras chief executive officer Pedro Parente.
Oil workers in Brazil start a 72-hour strike, amid the ongoing truck drivers' strike.