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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moorewasthebestbond's picture

Banana Sandpublic!

 

They've got CENTCOM surrounded!

Ms No's picture

Centcom can still get supplies but if Qatar starves they might get overrun pretty quick, which is fine. 

LA_Goldbug's picture

This will show the Middle East that NOTHING is safe. But Hell, that should have been taught in kindergarten.

Francis Marx's picture

Russian embassy in Qatar is probably really busy right now being the Qatary government officals are banging on their door.

https://goo.gl/maps/2QEbZn7WbEE2

chosen's picture

What could be better than the sandniggers going at each other?

Snaffew's picture

Maybe this is all a ploy to send cheap natural gas prices surging...

Brazen Heist's picture

Lets hear the "exceptional" asswipes explain to us about how legal all this is. Oh, never mind.

Centerist's picture

There is nothing illegal about countries cutting diplomatic ties and denying access to their ports of entry.  That is all that has happened.  There is neither a blockade nor any other act of war.

There's picture

The UN does not permit it.

Ms No's picture

That is an awful lot of Iron in the water near Iran.  It might be best to watch all military activities... just in case.  Watch them just starve Qatar into annex.  Now Saudi Arabia has a new US military base.  Someday the whole ME is going to rise up and rip those tablecloths to pieces.  I wonder where to US navy is out there.  Can Qatar defend itself?

 

 

blue51's picture

Are the " White Helmets " on the way to Qatar yet ? https://youtu.be/7rE0emXxJTo

Ms No's picture

Lol, they will probably come in later after starvation sets in and the radioactive munitions have been scattered, to auction the kids off.

MiniCooper's picture

Isnt this a bad outcome for the USA?

Qatar competing with Russian gas cuts Putin's power. Qatar in a gas OPEC with Russia increases Putins power. More to the point teh US has a base in Qatar - they dont want to allow teh Russian navy to take over and project power in teh Gulf.

Surely Saudi has to be put back in its box on this one?

 

markar's picture

Great. As if Syria's not bad enough, another lit fuse in the ME between super powers. 

desirdavenir's picture

last time I checked a blockade was technically an 

 

 

act of war...

Benito_Camela's picture

So where is the "naval blockade" addressed? All I see is the aforementioned countries not allowing Qatar flagged ships in their ports. Which "navy" is involved?  More irresponsible clickbait headlines at ZH I guess. 

Centerist's picture

Exactly.  There is no blockade.  I already knew that the term was going to be misapplied before even opening the article.

swytt's picture

..and who said Assad must go.Putin -Assad spell doing wonders.Let the lead rats finish each other and finish off the winner.Assad and Putin must be toasting.

Ms No's picture

Putin might be on the phone to Tehran trying to see if they are going to stike.  This will put a hurting on Iran.  Iran can't afford to share it's gas field with the poet crucifiers, can they?  Plus this could all be some type of ruse.  Iran knows it is coming one way or another and they have been preparing for a very long time.

Its creepy and too damn quiet.  Somebody call Kissinger and find out WTH is going on!

Jethro's picture

I love this. The Trump admin will just these assholes sort it out among themselves with any luck. Sell them all some weapons. Obama would have sucked off the leaders of all parties involved and preemptively surrendered.

any_mouse's picture

Islamic jihadis taking other Islamic jihadis hostage? Only makes sense if the groups are projects of opposing intelligence agencies.

Saudi Arabia, home to 20 9/11 pilots and crew members, who were members of Al Qaeda, a bin Laden project, the same bin Laden family that does billions of business with the Saudi government. Think Haliburton/Cheney and profits from War.

Now Qatar is on the Saudi (Sect A) Blacklist, because Iran (Sect B) and Al Qaeda (product of KSA and CIA).

Ah, review recent events of note. The IPO of Aramco. The House of Saud needs daily operating cash more than future cash revenues from declining oil reserves. The KSA buys millions of the finest death machinery from the US arms manufacturers. To do what? Annihilate Yemenis?

[Why would anyone with deep pockets ever sell a growing, successful business venture to the Public? IPO equals Cash Out. What if they called an IPO a "Cash Out Offering"? They need more Cash to grow the business and they want to share their good fortune with the Public.]

The Imminent and Inevitable Death of the Petrodollar.

Iran operates outside of the Petrodollar. As did Libya and Iraq.

Is Qatar planning on exchanging NG for other than USD?

Russia is moving towards ex Petrodollar, as does China.

All of the "nasty nations" have that in common.

A big shit sandwich and everybody is going to have to eat it.

The Guns of August. 1914. 1939. 2017?

83_vf_1100_c's picture

Iran could put a quick stop to this by mining the Strit of Hormuz Or, fuck the Saudis hard by sinking a few tankers in the Strait of Hormuz.

Lucky Leprachaun's picture

There's no naval blockade! Please ZH, be a bit more responsible with your headlines.

johnnycanuck's picture

Several articles later and I see the brave new wave of 'Libertarian' journalism,  here at Zerohedge, still hasn't dared to discuss the background events leading up to this and who set the Cat among the Pigeons.

Hacked and recently leaked emails describe months if not years of lobbying.

Then came a gift for the Saudi, Israeli, UAE alliance.. they managed to get a big mouth huckster and useful idiot elected President. I expect Israel firsters throughout the world could barely believe their luck.

How many times can you write about this and not at least make a reference to the Adelson funded neocon think tank teaming up with the Ambassador from the UAE to the US in their quest to knife Qatar and Iran? 

It's all about terrorism you said. Then it was all about gas. The first was highly doubtful, the 2nd just part of the equation, but there's more, much more.

Lying by omission is still lying whether it's here or at CNN

dogismycopilot's picture

For those expats in the Gulf - me now more than a decade - everyone is chuckling because the Qataris brought this shit storm down on themselves.

For too long they have been trying to be the clever boys in the room. The are extremists pretending to be moderates. They own about 1/3 of London and have always thought their money made them smarter than the other arabs and expats in the region.

The current ruler is a very young playboy who was given his seat by his father. These guys are the ultimate lucky sperm club. Or as one friend put it, they were born on third base and think they are MLB players. Unless you have transacted with them - and I have - you simply cannot imagine the arrogance.

What infrastructure that exists in Qatar was built with expat expertise and slave labor.

The Qataris are not going to back down easily. I think you will see them try to come back with a face saving response. They will get smacked down again.

And the minute they fuck with gas exports to the Dolphin pipleline (ie, UAE) you will see M1 tanks roll into Doha. 

Finally, I did see this coming and if you go back to my earlier comments you will see that I called it.

Regime change is going to happen unless the Qataris back down. 

katagorikal's picture

Agreed. I think Oman might be next on the list. They already have good relations with Iran, and if they even twitch in support of Qatar, they will be in trouble. When Sultan Qaboos dies, it will be very easy for any outside power to stir up a little civil disorder, based on two previous civil wars (Dhofar, Jebel Akhdar) and proximity to Yemen, especially AQAP in Hadramaut. What better excuse for an invasion to protect the peace?

Saudi has just built a road through the Empty Quarter to its first land border crossing with Oman at Ramlet Khelah, all the easier for the mechanized divisions to roll (Saudis built a causeway to Bahrain and look what happened there). The Omani-UAE border has always been contentious, with a 30km buffer zone and various enclaves and exclaves (Madha within Nahwa). Saudis covet the inland oil, access to the Arabian Sea (and the nice monsoon weather in Salalah :) The UAE would expand from its Fujairah coast and take control of Musandam on the Straights of Hormuz.

dogismycopilot's picture

You guys who think Iran is going to "save" Qatar don't understand the mindset here in this region.

The Persians will just take the extra gas flow and leave the Qataris (Arabs) to fight other Arabs.

Win Win for the Persians.

onmail1's picture

Cannibalism

The army of the prophet was eating humans to survive
This tie it is for oil & gas

JOE BUDTZ's picture

This is getting completely out of hand.

 

Trump's foolish policies in the Middle East play a direct role in encouraging this.

 

The only thing Qatar has done is talk a little reasonably about Iran, a county which attacks no one, unlike Saudi Arabia.

 

Qatar has an interest in good relations because with Iran because they share a giant gas field.

 

Trump actually is serving American/Israeli special interests even more ferociously than Obama did.

 

Everything from his weapons sale to Saudi Arabia (a covert ally of Israel's and fighting wars Israel wants), his new threats against Iran which does nothing to us, his topping-up Israel huge annual welfare subsidy,his continued needless violence in Syria (which is an Israel-motivated project), the treatment of Qatar, the insane speeches of Nikki Haley in the UN,, and on and on.

 

The people have no say in these matters, and their representatives - the powerful ones in the Senate, the legislative body with real power - are literally all bought-and-paid-for.

 

 

Elections mean nothing, and America's population is treated like a herd.