By Jessica Jaganathan and Amanda Cooper
SINGAPORE/LONDON, June 6 Oil pricing 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 United Arab Emirates, Egypt and Bahrain
said on Monday they would sever all ties including transport
links with Qatar, escalating past diplomatic disagreements.
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.
Platts' move is unlikely to have a significant impact on the
broader oil market because Qatar is one of the smaller producers
in the Organization of the 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 so far of that happening.
Al-Shaheen crude from Qatar usually loads onto supertankers
together with other Gulf-based grades, meaning flexibility of
movement is critical to transporting oil out of the region.
"It is typical in the Gulf to co-load VLCCs (very large
crude carriers) in combinations that include crude oil from
Kuwait, Saudi Arabia, Qatar, UAE and Oman," S&P Global Platts
said in a note to subscribers.
"As such, restrictions on vessels calling into Qatar and
associated uncertainty could impact the inherent value of crude
loading from Qatar, including al-Shaheen," it said.
Riyadh issued a similar shipping ban. Trading sources say
cargoes of al-Shaheen usually load onto VLCCs 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 Dubai and Oman crude, Abu
Dhabi's Upper Zakum and Murban grades, as well as al-Shaheen.
"Qatar-loading al-Shaheen may not be nominated in the Platts
Dubai Markets on Close process without mutual agreement between
buyer and seller," the company said in an emailed statement.
"Since its introduction as a deliverable into the Dubai
basket in January 2016, al-Shaheen has performed well. This
review is to ensure that the Dubai benchmark is not negatively
impacted by the current uncertainties surrounding Qatar’s
relations with its Gulf neighbours."
Buyers and sellers could mutually agree to alternate
loadings of al-Shaheen cargoes, but sellers should not impose
this, Platts said.
"If a party wants to bid up Dubai they won’t agree to any of
the sellers’ request to deliver al-Shaheen, so it will
definitely affect (the benchmark),” a source from an Asian
Sellers in the Platts trading window were previously allowed
to deliver, without buyers’ consent, any of the five crude
grades that make up the Dubai benchmark.
Platts said it would continue to assess and publish
independent values for other Qatari-loading crudes during the
review. It added that the process would not immediately impact
existing nominations for cargoes loading in June and July
against trades previously reported in the Platts pricing
process, known as the market-on-close.
The company, a unit of S&P Global Inc, produces a
number of benchmark prices for the crude oil market, including
(Additional reporting by Mark Tay in SINGAPORE; Editing by
Christian Schmollinger, Edmund Blair and Dale Hudson)