World Economy

Qatar Commodity Trade Chocked

Qatar Commodity Trade ChockedQatar Commodity Trade Chocked

The biggest Middle East oil and container ports banned all vessels sailing to and from Qatar from using their facilities amid a diplomatic crisis gripping the world’s main energy-exporting region, thus disrupting trade in commodities from crude oil to metals and food, said a report.

The dispute 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, Bloomberg reported.

Shipping restrictions risk hurting shipments of oil and refined products from the world’s biggest energy exporting region.

Saudi Arabian and Bahraini authorities closed off all of their ports to Qatari-flagged vessels or ships travelling to or coming from the Persian Gulf Arab state, according to a notice posted on the website of Inchcape Shipping Services on Tuesday. Container and oil terminals in the UAE also closed off traffic to any ships touching Qatar, according to separate statements from three port operators.

Traders are now worried that Riyadh's allies would refuse to accept LNG shipments from the Persian Gulf Arab state, and that Egypt might even bar tankers carrying Qatari cargoes from using the Suez Canal as they head to Europe and beyond—although Cairo is bound by an international agreement to let them use the waterway, reported Reuters.

The three Persian Gulf Arab countries along with Egypt severed ties with Qatar on Monday citing its support for extremist groups.

US President Donald Trump too joined in the dispute on Tuesday, saying leaders he met on a Middle East trip had warned him that Doha was funding "radical ideology" after he had demanded they take action to stop financing militant groups. Qatar vehemently denies the accusations made against it.

Crisis Deepening

With the crisis deepening, Qatar is now unable to load crude oil onto supertankers together with other Persian Gulf-based grades, and price agency S&P Global Platts said it would not automatically include the country in its Middle East price benchmark.

The agency noted that tankers usually combine Qatari shipments with crude from Kuwait, Saudi Arabia, the UAE and Oman before heading from the Persian Gulf. "Restrictions on vessels calling into Qatar and associated uncertainty could impact the inherent value of crude loading from Qatar," it said.

More worryingly, food imports are getting affected in Ramadan as Saudi Arabia closed its land border with Qatar, stranding thousands of trucks carrying supplies. Sources said the UAE and Saudi Arabia have already cut exports of white sugar to Qatar. Its consumption is traditionally higher during the holy month.

Qatar, which largely depends on food imports for its population of 2.5 million, has assured residents it has taken measures to assure that normal life continues, said the report.

However, shoppers packed stores on Monday to stock up. On Tuesday, fresh poultry and some types of milk were in short supply at two supermarkets visited by a Reuters reporter. However, plenty of fruit and vegetables remained on the shelves.

With exclusion zones sweeping into effect, vessels from Qatar are no longer able to dock in the UAE or Saudi Arabia as planned. According to shipping data on Thomson Reuters Eikon, around half a dozen oil, chemical and LNG tankers have had to leave UAE waters or have halted in the open ocean.

Bans on Qatar-linked oil and LNG vessels refueling at the UAE's port of Fujairah have added to chaos, pushing shippers to find new refueling points at extra cost, industry sources said.

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