Qatari commodity export costs to rise as UAE port ban disrupts trading

A general view taken on June 5, 2017 shows boats sitting in the port along the corniche in Doha. Arab nations including Saudi Arabia and Egypt cut ties with Qatar, accusing it of supporting extremism, in the biggest diplomatic crisis to hit the region in years. (AFP)

SINGAPORE: The costs of Qatari energy and commodity exports are likely to rise as the UAE ban on Qatari vessels cuts the ships off from the region’s main refueling port, forcing ships to sail further for fuel or pay higher prices.
The Arab allies are applying many economic pressure points, including barring Qatari flagged ships from entering their waters.
Around half a dozen oil, chemical and liquefied natural gas (LNG) tankers coming from Qatar have left UAE waters or halted in the open ocean instead of docking in the UAE or Saudi Arabia as planned, according to shipping data in Thomson Reuters Eikon.
Qatar is the world’s biggest LNG exporter, sending shipments of the fuel used in power generation to key users in Japan, China and India, and the country also exports about 620,000 barrel per day of oil, among the smallest Middle East oil producers.
However, vessels leaving Qatari ports typically refuel ahead of their voyages at the UAE port of Fujairah, the Gulf’s largest ship-fuel or bunkering port. That is leaving shipowners and charters scrambling to plan the logistics for their vessels.
“It’s a big mess this morning,” said a Singapore-based shipbroker.
The Britanis super-tanker, capable of carrying up to 2 million barrels of oil, was parked in Fujairah’s anchorage zone for the past week, but since Monday moved to just beyond Fujairah’s port limits, the data on Eikon showed.
Lying near the Strait of Hormuz, which ships pass on their way to customers in Asia, the US, or Europe, Fujairah is one of the world’s most important ports for the global energy market. Besides refueling, vessels also merge cargoes with those of other tankers before sending blended supplies to their final destination.
Ships looking to fuel in Fujairah may incur delays and higher costs after being forced to divert to nearby regional ports, or to Pakistan, Sri Lanka, India, and even as far as Singapore, shippers and traders said.
“Some of the affected vessels sailing out of the Gulf will probably have to look toward Iraq, Iran, or Oman for bunkers, however, it depends on the political stance of those countries,” said commodities broker Matt Stanley at Freight Investor Services in Dubai.
Blocking the Qatari vessels could displace up to 25 percent of the between 800,000 and 900,000 tons of marine fuels sold in Fujairah each month, said two trade sources familiar with the market.
Because of the small size of its oil exports, Qatari crude tends to be co-loaded onto tankers along with other regional crudes to make the voyage economical. That process may also be disrupted because of the ban.
While the UAE is clear in banning both Qatari-flagged vessels and ships coming from Qatar, it was not immediately certain whether Saudi Arabia is taking as strong of a position.
The Aramco-owned supertanker Asian Progress V, which is under a Singaporean flag and carrying Qatar Land crude, remains berthed at Saudi Arabia’s Ras Tanura Abu Sa’fah berth where Saudi Arab Medium crude loads.
Oil-pricing agency S&P Global Platts on Tuesday said it was reviewing the use of Qatari Al-Shaheen crude in its oil price assessments because of the port ban.
Besides disrupting energy exports, the UAE ban on Qatari ships is impacting aluminum exports. Norsk Hydro on Tuesday said Qatari metal exports that typically were reloaded on larger ships at the UAE port of Jebel Ali have been blocked amid the ban.