June 6, 2017 / 1:15 PM / in a month

UPDATE 1-Qatari export costs to rise as ports ban disrupts trading

5 Min Read

* Region's largest bunkering hub shuns Qatari vessels

* Bahrain joins Saudi, UAE in imposing ban-Inchcape

* Affected shippers may face delays, higher costs

* Norsk Hydro says aluminium shipments blocked from UAE port (Updates with Bahraini port restriction, adds comment)

By Roslan Khasawneh

SINGAPORE, June 6 (Reuters) - The costs of Qatari energy and commodity exports are likely to rise as Arab countries tighten restrictions on Qatari-linked vessels, cutting the ships off from the region's main trading ports and refuelling hub.

Saudi Arabia and the port of Fujairah in United Arab Emirates announced on Monday they were barring Qatari-flagged ships.

Bahraini port authorities have also suspended "marine navigation from and to the State of Qatar" with effect from Tuesday, a notice from Inchcape Shipping Services said.

The notice also made clear that the Saudi ban includes all vessels sailing to or from Qatar, regardless of flag, and that the UAE's Das Port Authority had banned Qatari-flagged vessels, or ships sailing to or from Qatar, from calling into any Abu Dhabi petroleum port.

The decision by Fujairah, a regional ship re-fuelling hub, to deny access to Qatari-flagged ships or ships heading to or from Qatar will force those ships to sail further for fuel or to pay higher prices.

Saudi Arabia and the UAE, along with Egypt, Yemen and Bahrain, cut diplomatic ties with Qatar on Monday, accusing it of supporting terrorism.

Around half a dozen oil, chemical and liquefied natural gas (LNG) tankers coming from Qatar have left UAE waters or halted in the open ocean instead of docking in the UAE or Saudi Arabia as planned, according to shipping data on Thomson Reuters Eikon.

Qatar is the world's biggest LNG exporter, shipping the fuel used in power generation to users in Japan, China and India, and the country also exports about 620,000 barrels per day of oil, among the smallest Middle East oil producers.

Vessels leaving Qatari ports typically refuel before their voyages at Fujairah, the Gulf's largest ship-fuel or bunkering port. That is leaving shipowners and charters scrambling to plan the logistics for their vessels.

"It's a big mess this morning," said a Singapore-based shipbroker.

The Britanis super-tanker, capable of carrying up to 2 million barrels of oil, was parked in Fujairah's anchorage zone for the past week, but since Monday moved to just beyond Fujairah's port limits, Eikon data showed.

Lying near the Strait of Hormuz, which ships pass on their way to Asia, the United States or Europe, Fujairah is one of the world's most important ports for the global energy market.

Besides refuelling, vessels also merge cargoes with those of other tankers before sending blended supplies to their final destination.

Ships looking to fuel in Fujairah may incur delays and higher costs after being forced to divert to nearby regional ports, or to Pakistan, Sri Lanka, India, and even as far away as Singapore, shippers and traders said.

"Some of the affected vessels sailing out of the Gulf will probably have to look towards Iraq, Iran, or Oman for bunkers, however, it depends on the political stance of those countries,” said commodities broker Matt Stanley at Freight Investor Services in Dubai.

Blocking the Qatari vessels could displace up to 25 percent of the between 800,000 and 900,000 tonnes of marine fuels sold in Fujairah each month, said two trade sources familiar with the market.

Because of the small size of its oil exports, Qatari crude tends to be co-loaded onto tankers along with other regional crudes to make the voyage economical. That process may also be disrupted because of the ban.

The Aramco-owned supertanker Asian Progress V, which is under a Singaporean flag and carrying Qatar Land crude, is due to load additional Saudi crude at Saudi Arabia's Ras Tanura Abu Sa'fah berth and hopes to escape the ban because it arrived before the restriction was announced.

"The Asian Progress V is going to berth soon and the pilot is on board," a shipping source with knowledge of the matter said. "The vessel arrived on the 4th so they are arguing that the ban does not apply to this vessel."

Oil-pricing agency S&P Global Platts said on Tuesday it was reviewing the use of Qatari Al-Shaheen crude in its oil price assessments because of the port ban.

Besides disrupting energy exports, the UAE ban on Qatari ships is affecting aluminium exports. Norsk Hydro said on Tuesday Qatari metal exports that typically were reloaded on larger ships at the UAE port of Jebel Ali have been blocked.

Additional reporting by Jessica Jaganathan and Mark Tay in Singapore and Jonathan Saul in London; Editing by Christian Schmollinger and Adrian Croft

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