On June 5, various Gulf nations including Saudi Arabia, the UAE, Egypt and Bahrain announced that they were severing diplomatic ties and transport links with Qatar. As a result, Qatari-flagged and owned vessels have been banned from all UAE and Saudi ports.

Certain ports in the UAE and Bahrain have also banned any vessel travelling from or to Qatar from entering, including Khor al Fakkan and Fujairah which is the key bunkering port in the AG. The diplomatic crisis in Qatar is likely to have little impact on the wider oil market as well as the OPEC production cuts as Qatar is one of the smallest crude producers (around 600 kb/d) in the cartel.

However, the crisis has upended shipping markets as tightened port restrictions are expected to cause logistical complications, disrupting Qatari crude and refined product exports. Fujairah’s ban on Qatari-flagged and owned vessels as well as vessels moving to and from Qatar is expected to weigh heavily on bunker sales in the hub, as well as result in increased costs for owners who have to seek alternative ports for refuelling. On the clean tankers side, owners have been seeking a premium for Qatar-loading cargoes due to increased uncertainty in the region as well as potentially higher bunker costs. Ras Laffan is a key port for condensate and naphtha loading.

Things are a little messier on the dirty tanker side as it is extremely common for charterers to co-load various grades of AG crudes on a VLCC. A lot of uncertainty is currently surrounding the process, with charterers preferring to take preemptive measures as seen from Total replacing the 297,345 dwt DS Venture with the 157,850 dwt Eagle San Juan and 157,737 dwt Nordic Star for a Jebel Dhanna/East and Al Shaheen/East voyage respectively. VLCCs have managed to command a slight premium for now, with rates for the key AG/Japan up by w3 points since 5 June. However, should any issues regarding co-loading come to fruition, charterers are likely to turn to smaller tankers such as Suezmaxes and Aframaxes instead. Another option worth exploring would be STS transfers as well.