Saudi Arabia, the United Arab Emirates, Egypt, Bahrain, Libya and the Maldives have severed diplomatic relations with Qatar and indicated that they plan to cut air and sea traffic with Qatar. Already, Etihad, Emirates and Flydubai have announced that they have suspended flights to and from Doha with effect from 6 June and the land border between Saudi Arabia and Qatar has been closed.

The potential consequences for the shipping industry are still unclear. Qatar has a significant offshore oil and gas sector, with many foreign flagged OSVs employed there, as well as a significant LNG fleet and intra-GCC trade in aggregates. The Port of Fujairah, the major regional bunkering port, has already confirmed that Qatari flagged vessels and any vessels destined for or arriving from Qatar will be prevented from calling at the port or at offshore anchorages. Other regional ports are expected to follow suit. There may be reciprocal restrictions imposed by Qatar against the other states.

A number of operational issues may arise including the increased difficulty and costs in effecting crew changes, where a significant number of OSV companies manage such services out of the UAE. Further down the road, there will be questions as to how vessels will be able to obtain spares and other supplies, given the closure of the land border and the fact that much is transited by road.

We expect further information to be forthcoming in the coming days as authorities in the relevant jurisdictions begin to implement restrictions. For the moment, however, businesses which are concerned that they may be affected by restrictions on trade with Qatar would be well advised to consider any applicable force majeure provisions in their long term contracts such as charterparties, as well as any trading limit clauses, safe port warranties, liberty to deviate and other protective clauses in order to identify potential vulnerabilities they have, as well as checking their insurance position.
Source: Clyde & Co.