Platts bars Qatari crude in pricing process

singapore/london — 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 UAE, Egypt and Bahrain said on Monday they would sever all ties including transport links with Qatar.

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 Organisation of the Petroleum Exporting Countries.

Any disruption to Qatar’s liquefied natural gas exports 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.

Restrictions on vessels calling into Qatar could impact the inherent value of crude loading from Qatar S&P Global Platts

“It is typical in the Gulf to coload 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.

“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.