The standoff between Qatar and its Arab neighbours has seen gas shipments bound for the UK change direction. Further LNG disruption is expected and gas prices are set to rise on the back of the confusion following the Middle Eastern spat. At the start of the week a number of Arab nations cut diplomatic ties with Qatar, claiming the Middle Eastern state was funding terrorist groups.
Two Qatari LNG shipments, originally slated for the South Hook terminal in the UK, abruptly changed direction in the Gulf of Aden yesterday. The Nakilat ships Al Mafyar and Zarga made U-turns ahead of the Suez Canal and are now heading back towards their home base. The Suez Canal Authority has this week stressed that despite Egypt cutting ties with Qatar the waterway would remain open to Qatari ships. News that the gas ships had altered course saw UK natural gas futures spike nearly 4% yesterday.
“A major effect of the cut in diplomatic relationships with Qatar is likely to be felt in the shipping sector,” FGE, a London-based consultant, said in a research note Thursday. Ships travelling to and from Qatar will need to find an alternate bunkering, and LNG shipping lines will have to adjust schedules and routes, it said. “This will increase costs, and in the near term, could even lead to delays in LNG deliveries.”