SINGAPORE: The costs to ship fuel and crude oil from Qatar are expected to rise after the United Arab Emirates banned vessels that previously called at Qatar from docking at UAE ports, multiple sources from the oil and shipping sectors said on Monday.

After Saudi Arabia, the UAE, Egypt and others last week severed diplomatic and transport links with Qatar after accusing it of sponsoring terrorism, the UAE blocked vessels carrying Qatari crude from entering the Emirates’ oil ports.

This is disrupting the typical logistics of the oil industry where buyers take very large crude carriers (VLCC) capable of carrying 2 million barrels of oil and load up to four different 500,000-barrel cargoes to save on costs. Buyers are now splitting cargoes on smaller Suezmax ships that carry 1 million barrels to load separately in Qatar and the UAE, the sources said.

Suezmax rates are now expected to rise to between Worldscale (WS) 75 to 80 on higher demand for these vessels, said two of the sources.

CSSA, the shipping arm of French oil major Total, South Korean refiner SK Energy and BP have provisionally booked four Suezmax tankers to load crude and condensate in Qatar and the UAE in the second half of June at rates of WS67.5 to WS68.5, shipping data on Thomson Reuters Eikon showed.

Worldscale is a formula used to calculate freight costs.

“Operations are very messy. Some refiners need to re-arrange or break their cargoes into Suezmaxes which are more costly,” a Singapore-based trader said.

Companies are also arranging to perform ship-to-ship transfers of smaller parcels onto VLCCs in the water off Sohar, Oman, which has stayed neutral in the conflict, the sources said.

Qatar is one of the smallest oil producers in the Middle East, but almost all of its just over 600,000 barrels per day of production heads to Asia. Qatar Petroleum’s upstream oil partners include Total and Occidental Petroleum Corp.

“We all just do not know if this situation will be solved within the next few days or will drag on for weeks or months,” said Ralph Leszczynski, head of research at Banchero Costa.

In addition to crude, Qatar also exports between 600,000 to 700,000 tonnes a month of naphtha, an oil product typically refined into petrochemicals. Shipowners have now added a premium for ships loading Qatari fuel for Asia, the sources said.

Owners are adding 2.5 percentage points more, or about $700 (Dh2,571) a day, for tankers on this route, a Singapore-based shipbroker said.

— Reuters