Qatari goods would not be allowed to be unloaded in Saudi ports.
“Vessels flying the flag of Qatar or vessels destined to or arriving from Qatar ports are not allowed to call on the Port of Fujairah or Fujairah Offshore Anchorage regardless of the nature of their call until further notice,” authorities in Fujairah, an emirate in the UAE and regional bunkering hub, said in a notice.
OPEC member Qatar, the world’s top seller of liquefied natural gas (LNG), produces around 600,000 barrels of crude oil per day and is not a big crude exporter.
But it is a major exporter of condensate, an ultra-light form of crude oil, as well as liquefied petroleum gas (LPG), with most supplies of the two fuels going to Japan and South Korea under long-term supply contracts.
The shipping ban will make the logistics of buying Qatari crude and condensate much harder.
Impact on Energy Market
Amidst worsening row among the Persian Gulf Arab countries, some experts forecast oil prices to go beyond $55 a barrel. But their predictions turned out to come untrue. In reaction to the Qatar crisis, world markets were shocked and oil prices rallied slightly; however, they fell again due to lack of confidence in the future and uncertainty over the face of an OPEC output cuts deal.
Nonetheless, this question still stands to know if oil prices would increase in case the row between Qatar and the Saudi-led coalition lingers on.
In order to respond to this question, several issues must be taken into consideration:
With a per capita income of $130,000 a year, Qatar is the world's richest country and largest producer of LNG. But with an oil output of 620,000 b/d, it is among the smallest member states of the Organization of the Petroleum Exporting Countries. That shows that Qatar is not a key figure in oil production and even if it pulls out of the output cuts deal no important changes will transpire the world markets. Furthermore, besides Saudi Arabia are Iran and Russia involved in the deal and Qatar has no intention of damaging its relations with these two countries and its fellow OPEC member states. Qatar is well aware that oil prices will fall immediately after it quits the deal and it will not augur well for the Qatari economy which is currently besieged. Even Qatar's oil production halt could not significantly affect the market because Saudi Arabia will not hesitate to compensate for any void left by Qatar. In that case, Qatar will need months to regain its standing in the market. Therefore, Qatar would not be willing to leave the deal or stop supplying oil on the market and it continues to remain dependent on stability in the energy market.
This is not the first time that the Persian Gulf region, which is the resource-richest energy in the world, is engulfed in a crisis. Moreover, OPEC oil producers have experienced political infighting on many occasions. Therefore, regardless of until when the political crisis between Qatar and Arab governments will end, the issue of economy and energy revenues are important for producing countries. In the past, wars and conflicts have never left any serious impact on the flow of oil and OPEC agreements. Therefore, oil producers are trying their best to make a distinction between political tensions and oil policy. If not, they will be harmed.
Tensions among the Persian Gulf littoral states will not bring a halt to oil supply in the region. The possibility of an all-out war between Qatar and other Arab governments that would disrupt oil exports from the Persian Gulf and affect the market stands very low.
The most significant harm that is likely to be inflicted on the energy market due to the Qatar crisis would be a possible halt in its natural gas supply to Asian nations like India, South Korea and Japan – the three large buyers of Qatar's gas. For the time being, Qatar's gas activities are unlikely to affect gas prices because agreements for gas sales are signed for the long term; therefore, periodic and short-term crisis could not affect them.
Last but not least, a deep energy crisis could happen only if the flow of oil and gas from the Persian Gulf region is disrupted. In case the Qatar-Saudi row affects the OPEC output deal, oil prices would be likely to fall in the near future. For the moment, no significant event is in the offing.