Gulf States Launch Naval Blockade Of Qatar

Tyler Durden's picture

In what has emerged as the most significant escalation to result from the Qatar diplomatic crisis - which pits two of OPEC’s largest oil producers, Saudi Arabia and the UAE, against the world’s biggest exporter of liquefied natural gas and further disrupts stability in the region -  the biggest Middle East oil and container ports banned all vessels sailing to and from Qatar from using their facilities.

According to a notice posted on the website of Inchcape Shipping, Saudi Arabian and Bahraini authorities closed off all of their ports to Qatari-flagged vessels or ships traveling to or coming from the Persian Gulf state, in what has been described as a naval blockade. 

As Bloomberg adds, container and oil terminals in the United Arab Emirates also closed off traffic to any ships touching Qatar.

Saudi Arabia’s eastern coast is home to the port of Ras Tanura, which state-owned Saudi Arabian Oil Co. says is the biggest crude terminal in the world. Jebel Ali port, the region’s biggest container terminal, will be restricted from Tuesday until further notice, its operator Dubai’s DP World Ltd. said in an emailed statement according to Bloomberg. In the U.A.E., DP World operates Jebel Ali along with Dubai’s Mina Rashid and Mina Al Hamriya ports. Elsewhere, government-owned Abu Dhabi National Oil closed its crude and refined-product ports to any vessels to or from Qatar. The port at Fujairah, a main oil transit and refined product hub, said Monday it was closed to Qatar-linked traffic.

For now, shipping at Egyptian ports was operating normally as of Tuesday, according to Inchcape. The company also said the Suez Canal Authority has advised that there aren’t restrictions on vessels in the waterway since it is an international route.

Separately, Bloomberg also reported that A.P. Moller-Maersk A/S, which owns the world’s biggest container line, said it can no longer get cargo to Qatar as a result of the Saudi-imposed blockade of transport to and from the Gulf state.

Though the situation remains “very fluid,” with updates expected throughout the coming hours, Maersk Line expects “disruptions to our Qatar services,” spokesman Mikkel Elbek Linnet said in an emailed statement on Tuesday. For now, “we have confirmation that we will not be able to move cargo to or from Qatar,” he said.

Maersk Line doesn’t use its own vessels to bring cargo to Qatar, but relies on third-party so-called feeder services from the United Arab Emirates Jebel Ali port in Dubai. “We will notify our customers on alternatives as soon as possible,” Linnet said.

Maersk ships about 16 percent of the world’s seaborne freight, making it the global leader in container transportation. Maersk, which has been working on splitting off its energy business to concentrate on its transport operations, said last year it lost the biggest oil field in its portfolio when Qatar ended a 25-year partnership with the Danish company. The agreement allowing Maersk to operate the Al Shaheen offshore field expires next month, after the company lost its bid for renewal to Total SA.

In addition to crippling overall Qatar-bound trade, the sea blockade will hurt shipments of oil and refined products from the world’s biggest energy exporting region.

According to Per Mansson, a shipbroker at Affinity Shipping in London, the Saudi ban on vessels going to and from Qatar will create logistical difficulties for some combination charters of crude oil supertankers from the Persian Gulf and will likely increase the use of smaller vessels. "It will be a little more difficult, it will be a little bit more tricky for certain charters”: Mansson said, noting that there are “not huge quantities” of oil being exported from Qatar relative to other Gulf states.

Afffinty also says that the combination charters, where loading occurs in more than one nation, are popular on routes to Japan, Korea and adds that the use of Suezmax and Aframax ships on Qatar routes may increase. That said, companies could still book combination charters with Qatar and other nations that don’t have restrictions, including Iran and Iraq.

Yet while the shipbroker tried to talk down the potential impact of the shipping ban, according to Bloomberg oil strategist Julian Lee, blocking vessels going to/from Qatar is probably the most important direct move that Saudi Arabia has made in terms of hindering its smaller neighbor’s ability to export crude oil and condensates.

Saudi Arabia’s move mirrors similar restrictions by United Arab Emirates, which will mean ships going to/from Qatar no longer have access to the Middle East’s biggest refueling center at the port of Fujairah.

According to Bloomberg, 27 of 31 vessels that loaded Qatari crude, condensate in May co-loaded in either Saudi Arabia or the UAE.

The good news is that aside from the above, Lee believes that there is little reason - so far - to believe that measures against Qatar will have a materially negative impact on country’s energy exports.

* * *

Finally, there is the question of LNG shipments.  Here, as Reuters reported earlier, LNG traders took a wait-and-see approach, alert to potential disruption of regional energy flows "but erring on the assumption that any trade shocks could be contained given well supplied global markets."

Qatar's top clients in Japan and India quickly received reassurances that supplies would continue as usual. Whether this persists is unclear: within hours of the diplomatic break, the UAE barred all vessels coming to or from Qatar using its popular anchorage point off Fujairah. The ban impacts about six LNG vessels linked to Qatar now anchored in the Fujairah zone which may need to be moved out, according to shipping data on Thomson Reuters.

 

But there was little sign yet of LNG supply being hit. "I cannot see this impacting exports of Qatari LNG outside the Arab world at all and it won't likely impact LNG and gas pipeline exports within the Arab world either," Morten Frisch, an independent LNG and gas industry consultant, said. Still, traders startled by the development began to plan for all eventualities, especially any upsets to piped gas supplies from Qatar to the UAE.

Egypt, while relying heavily on Qatari LNG brought in by Swiss commodity trade houses, is less vulnerable than the UAE because it has no direct deals with Qatar, domestic gas output is squeezing out the need for imports, and traders would be liable for any moves by Qatar to restrict exports.

"Trafigura, Glencore and Vitol frequently take LNG from Qatar and deliver it to Egypt but they take ownership of the cargoes at the Qatari port and don't use Qatari ships, meaning technically that Qatar shouldn't have sway," one trade source said. In reality though, Qatar can block exports to certain countries by issuing so-called destination restrictions.

"It's not clear yet," another LNG trader said of potential impacts to deliveries from Qatar to Egypt.

* * 

Can (and will) Qatar respond to the blockade?

Retaliatory measures such as suspending LNG supply deals would leave Qatar free to push more volumes into Europe where it has access to several import terminals. Under that scenario, trade houses with supply commitments to Egypt could turn to the United States, Algeria and Nigeria for replacement cargoes, traders and industry sources told Reuters.

The deterioration in ties between Qatar and Egypt contrasts with 2013 when the producer gifted five LNG cargoes to Egypt - when Mohamed Mursi, leader of the Muslim Brotherhood, served as president. Ironically, it is Qatar's support for the MB - if only according to the "official narrative" - that is the catalyst for the current crisis.

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TheSilentMajority's picture

Someone gonna liberate Qatar?

Peak Finance's picture

Natty is plumbing the depths 

If this is about Natty as sugested

then load up and sit on it for a while

spacemonkey99's picture

 hunting camels in war zones has consequences but I guess they don't call them camel jockeys for nothing.. Qatar said screw the blockade that camel hunt was worth it!

Snaffew's picture

and wouldn't you know it...the markets/S&P spiked in conjunction with that news hitting the wires.

directaction's picture

Saudi Arabia has over 450 fighter jets.
Qatar has 14 old French Mirage fighters.
If fighting starts, it'll be a quick one unless Qatar hits Ras Tanura.
In which case everyone will get involved.  

Gravatomic's picture

Saudi Arabia is full of idiot camel jockeys, neither country can fight a proper war. Warriors, pft, step aside for the Russians.

Deep In Vocal Euphoria's picture

i just feel sad for all the good american men who are tricked into believing they are fighting for freedom and the american flag....to protect freedoms at home.....

 

man...its so sad...you should look at me while im typing this, im shaking my head for 10 seconds.....

 

i hope all these victims will get justice one day......casualties of the fake american bank wars.................. =/

VK's picture

Yee-haw boys! Another war in the Middle East. When do the Saudis invade? Place yer bets!

VK's picture

Yee-haw boys! Another war in the Middle East. When do the Saudis invade? Place yer bets!

all-priced-in's picture

Germany should brace for an influx of refugees from Qatar.

 

/s/ 

spacemonkey99's picture

They wil be flying in on leer jets this group

besnook's picture

any minute now china will step in. that's when the fireworks really start.

Publicus's picture

World War 3 is on track for 2020.

spacemonkey99's picture

They will have to move up the World Cup in Qatar in that case

Karmageddon's picture

2020 you say? Is that eastern standard time?

Francis Marx's picture

Looks like the Russians will have some new friends in Qatar. Watch.

roadhazard's picture

The Real pressure going on right now is along the Syria/Jordan border. Something has to give pretty soon.

general ambivalent's picture

Get your war caps on, Drumpftards. We're strapping you all to scud missiles.

YourAverageJoe's picture

Let's stay out of this one Mr. President.

Texas has all we need for the next 100years.

samsara's picture

Ah the days of Spindle Top are LONG over.   Texas couldn't supply their own energy needs today.    No Jed Clampet,  No GIANT  movies.   

Why would they drill in 5000 feet of water in the gulf if Texas could still produce?

Full Court Lugenpresse's picture

LOL idiots you can't blockade the entire equator, it's impossible

Atticus Finch's picture

You must be thinking of the EQatar.

mastersnark's picture

ISIS, Saudi Arabia, Israel, & USA have joined hands to spread the cancer that is Sunni Islam.

Iran, Russia, Syria, Hezbollah are fighting to stop the cancer.

Qatar is just being punished for picking the right side.

farflungstar's picture

Do the Qatari royalty get regime changed for a more compliant Saudi vassal willing to toe the (IRAN BAD) line?

Eagle40's picture

Looks to me that our globalist and Jew Banker scum of the world want to start a war. How convenient....We all know where this going.

surf@jm's picture

"In addition to crippling overall Qatar-bound trade, the sea blockade will hurt shipments of oil and refined products from the world’s biggest energy exporting region."

 

Oh, so thats what this is about......Another Arab oil embargo to increase the price of oil...

So, I guess this will eventually result in 6 dollar a gallon gas at the pump...

ArgentDawn's picture

Qatar had their chance, Syria didnt pan out as expected. Time for the next phase, Iran.

Korprit_Phlunkie's picture

Maybe this has something to do with clintons transferring 1.8 billion $ to Qatar in November last year from the clinton fund. This is TPTB getting their money back by hook or by crook.

ogretown's picture

What an opportune moment for both Vlad Putin and America's President.  The Americans stay out of this mess and Russia cuts a deal to airlift supplies to Qatar.  Perhaps even - we see the Coaltion of Courage weigh in on the side of Qatar and sign a mutual defense contract.  Key of course is that American remain firmly on the sidelines. And even if the other members of Team Courage do not weigh in we could be looking ahead where Russia trades Qatar for what is left of the Ukraine territory?  Too optmistic?  Perhaps, but rest assured that Putin is looking six moves ahead.

GlassHouse101's picture

How many people do you suppose have died because of the 'almighty dollar'?

GaryInTexas's picture

Not nearly as many as died because of the almighty Koran

VIS MAIOR's picture

http://en.kremlin.ru/events/president/news/54703

Telephone conversation with Emir of Qatar Tamim bin Hamad Al Thani

Vladimir Putin had a telephone conversation with Emir of Qatar Tamim bin Hamad Al Thani.

June 6, 2017
21:15

Russian-Qatari cooperation, primarily in the trade, economic and investment areas, was discussed, and the results of the meeting of the bilateral Intergovernmental Commission in April 2017 were highly praised.

International issues were also discussed. Vladimir Putin reaffirmed Russia’s principled position in favour of settling crises by political and diplomatic means, through dialogue.

Jtrillian's picture

Am I the only one who is questioning the legitimacy of this recent spat with Qatar and the rest of the Saudi sponsored states?  This really smells of fake news, and a possible psyop in order to artificially inflate oil prices and possibly draw Iran/Russia into a larger conflict.  I will explain. 

First, this came out of nowhere.   No one saw this coming.  It was all based on claims that Al Jazeera was running news the Saudi's didn't like.  This is hardly a valid reason for the recent actions that have been taken. 

Second, Qatar has not had any tensions that I am aware of with Saudi Arabia, Egypt, .  While they are likely to sponsor the same ISIS terrorists that the Saudi's do it's NO SECRET that Saudi Arabia is by far the largest sponsor of terror in the Middle East.  This is not a secret.  Saudi Arabia promotes Wahhabism extremism (similar to what ISIS teaches).  They have been funding ISIS in both Iraq and Syria.  Heck, 15 of the 19 9/11 hijackers were Saudi.  Then there are th 28 pages which tied the Saudi's to that attack - yet there was no reason for further investigation because they were a US ally???  WTF!!!

Third, this "rift" story with Qatar is being pimped by ever mainstream media rag in the West.  If I have learned one thing, it's that we need to question the MSM esp. when they are selling something.  The REAL news tends to be ignored by the corporate controlled media. 

Is it possible the Saudi's (and their partners) are going after Qatar?  I suppose so.  But it's far more likely that this is a false flag attempt to justify raising oil prices and stifling demand since OPEC and the rest of the oil producing nations can't cut back on supply.  IF it is legitimate, it would be more likely that it's because Qatar has become more progressive minded and has a louder voice with Al Jazeera - which the Saudi's certainly would not like if they cannot control the message ( I do not follow Al Jazeera btw - there are more reliable sources like the hedge). 

Regardless, a healthy dose of scepticism is warranted here.  I don't trust the Saudi's as far as I can throw them.  The US has created a real monster in the Middle-East by enabling this totalitarian regime.  Of course we did the same with Turkey and now Erdogan is Hitler incarnate - but that's another story.

smacker's picture

I totally agree with you about this crises coming out of nowhere like a summer storm in a teacup, especially given that Qatar and Saudi were jointly funding terrorism in Syria which implies a close working relationship. Even the motives are unclear. Am I really to believe that they all went apeshit with Qatar just because it speaks to Iran?

I suspect it's got summat to do with Qatar's nat gas. Somebody wants it.

Ms No's picture

They seem to want to destabilize the entire ME and Africa.  I don't know how they expect the Sauds and Israel to survive that.  Maybe they don't care because they are planning on taking the whole marble.  They seem to want war with Russia so no amount of potential destabilization seems to deter them.  They want the whole Shia Crescent toast, at the very least.

smacker's picture

It's interesting to note that countries and regions where most of the destablization is being provoked have substantial fossil fuel deposits, oil and gas. Perhaps they want to be in control of the world's remaining resources.

Nolde Huruska's picture

Is it just me or is this turning into one of those singularly interesting affairs that we see so rarely these days?

Horse Pizzle's picture

No problem.  Ships stop at Qatar last.

aliens is here's picture

Awesome I hope wars breaks out between them bastards. MIC needs to sell bombs.

Brazen Heist's picture

Fuck the MIC. They're a bigger problem.

Francis Marx's picture

Looks like those extra large Russian transport jets will keep busy delivering to Qatar

Stan's D's picture

Put options on a depeg anyone?

Horse Pizzle's picture

USA, Australia, Qatar, Iran, Russia can replace crude oil energy with cheap LNG. OPEC is scared.  They cannot feed the breeders they have much less their population explosions based on Muslim breeding rules.

Soph's picture

Just don't include Canada in that list. Although we're a world leader in NG reserves, we can't build a pipeline to our coasts to save our lives. Our governments (provincial and federal) are all cowardly bitches subservient to the greenies and the indian land claims.

smacker's picture

The problem if Qatar cuts LNG supplies to other Gulf states (eg UAE) in retaliation to this outrageous blockade is that it might be exactly what they want to justify an invasion of Qatar and overthrow the al-Thani rulers to grab their nat gas.

Seems to me the best solution would be for Qatar to do a new friendly deal with Iran whereby shipping to/from Qatar comes in under the Iranian flag, which of course would nicely make the other Gulf states even madder. But the other Gulf states wouldn't risk provoking Iran.

serotonindumptruck's picture

"But the other Gulf states wouldn't risk provoking Iran."

Or, would they?

smacker's picture

I think the only Gulf state that could consider military action against Iran is Saudi and it's full of Wahhabi nutters, so anything is possible. But Saudi would have to weigh up very carefully the risk of Iranian bombs and missiles dropping on its oil production facilities, particularly Ghawar which could potentially end up terminally damaged. The other Gulf states are just noise level but they also have glorious luxury hotels to think about.

Omega_Man's picture

israhell wants the oil

Snaffew's picture

Can the central banks hold the line or will they back away and let the markets "reset" a bit?