Platts Excludes Qatari Loading Crude From Pricing Process

Oil price agency S&P Global Platts said it will not automatically include Qatari-loading crude in its Middle East benchmark after Saudi Arabia and some other Arab states cut ties with Doha, a move that disrupted traditional shipping routes.

Saudi Arabia, the UAE, Egypt and Bahrain said on Monday they would sever all ties including transport links with Qatar, escalating past diplomatic disagreements, Reuters reported.

Within hours, the UAE barred all vessels coming to or from Qatar using its anchorage point off Fujairah, a popular location for bunkering, where vessels take on fuel of their own.

The Platt's move is unlikely to have a significant impact on the broader oil market because Qatar is a small producer in the Organization of Petroleum Exporting Countries.

Any disruption to Qatar's liquefied natural gas exports, an area in which it is a major world player, could hit global prices, but there is no indication till now of that happening.

Al Shaheen crude from Qatar usually loads onto supertankers together with other Persian Gulf-based grades, meaning flexibility of movement is critical to transporting oil out of the region.

"It is typical in the Persian Gulf to co-load VLCCs in combinations that include crude oil from Kuwait, Saudi Arabia, Qatar, UAE and Oman. As such, restrictions on vessels calling into Qatar and associated uncertainty could impact the inherent value of crude loading from Qatar, including Al-Shaheen," S&P Global Platts said in a note to subscribers. Riyadh issued a similar shipping ban. Trading sources say cargoes of Al Shaheen usually load onto Very Large Crude Carriers in Saudi Arabia before sailing to Asia. Trades, bids and offers for Qatar's Al-Shaheen grade, a medium sour crude, have been included in Platts' assessment of its Dubai price benchmark, which underpins the vast majority of oil trades in Asia, since January 2016.

The Dubai benchmark is backed by Oman crude, Abu Dhabi's Upper Zakum and Murban grades, as well as Al Shaheen.