Oil prices started the month…
The UK government has added…
Crude oil and fuel shipments from Qatar are set to become more expensive after the United Arab Emirates imposed a port-wide ban on vessels carrying these commodities from Qatar. This is what oil industry and shipping sources told Reuters today.
Crude oil loadings are often made into Very Large Crude Carriers that can accommodate up to 2 million barrels of oil, made in up to four loadings. VLCCs are cheaper than Suezmax tankers, which can hold half of this, but now oil traders have to resort to the latter, as they can’t load Qatari and Emirati blends together in the bigger vessels.
According to the Reuters sources, this will lead to a jump in Suezmax shipping rates to up to Worldscale 75-80. Tanker booking data from Reuters Eikon has shown that three oil companies, including Total, Korean refiner SK Energy, and BP, have booked four tankers—provisionally—at freight rates of WS67.5-68.5 apiece. All the vessels should load oil and condensate in Qatar and the UAE.
An alternative to the Suezmax carriers is doing ship-to-ship loadings from smaller vessels onto VLCC in the neutral waters of UAE neighbor Oman.
Qatar is not a very large oil producer with its current daily rate at around 600,000 bpd, but it exports almost all of this to clients in Asia. It also exports naphtha – a common raw material for a number of petrochemicals.
Related: Is $50 Oil Still Realistic?
After the UAE, Saudi Arabia, and five more countries severed all diplomatic relations with the tiny Gulf kingdom, oil prices responded with a further decline on concern that Qatar may decide to forego its obligations under the OPEC-non-OPEC production cut agreement. The decline highlighted once more how volatile the oil market has become, if a small producer like Qatar can affect prices so much.
Still, Brent and WTI started the week with gains on trader confidence that prices have bottomed out despite the still-present inventory overhang.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.