Qatar has enormous gas reserves. Gas requires a market. When the local market is limited, producers often have to invest heavily to make their gas marketable worldwide. Qatar, along with many other countries, have invested in conversion of their gas to liquified natural gas (LNG) for the purpose of export. These liquification plants (usually called “trains”),, shipment ports and the carriers usually are require billions of dollars to construct. There has to be ports constructed to safely receive the LNG. For safety purposes, the carriers’ offloading buoys are located a long distance from shore. Qatar is the world’s largest LNG exporter. This opens up the world to their gas.
Qatar has contracts with Japan to supply LNG. The shipping is now more costly and likey causing delivery delays because these tankers can not refuel in the Persian Gulf. However, shipments will continue. Japanese buyers of LNG are hoping to renegotiate the LNG delivery contracts on better terms, to take advantage of Qatar’s situation.
Qatar also supplies the UK. There was concern last week when two tankers delivering Qatari gas turn around as they entered the Gulf of Aden, but later reports indicate the Qatari tankers can pass through the Suez canal and supply Europe.
Oil export is a bit tricky. The very large crude carriers (VLCC) carry nearly a billion barrels of oil. They generally make multiple loading (“liftings”) at ports of other countries to fill their tanker. However, the rules of the blockade prohibit this- if a tanker has a partial load from Qatar, it can not top off its load by lifting at a Saudi port. Qatar is scrambling to find smaller tankers to lift their crude.
Food is being supplied by an emergency airlift from Turkey. The US could be doing much more as we have an airbase in Qatar, but I suspect the 100 billion dollars in potential new contracts with the Saudi’s is keeping Trump from taking any action. Doha is not Berlin. The stock market in Qatar dropped around 10%, which does not include Qatargas, as it is not a publicly traded company. The credit rating of Qatar dropped a notch due to an S+P downgrade.
I have combed the internet, looking for possible ways each side could de-escalate the crisis. I found nothing that was likely. The most obvious way to keep the diplomatic/ economic crisis from turning into a humanitarian one, is to stop the deportations, or at least push back the deadlines. Qataris were given 2 weeks to leave Bahrain, UAE and Saudi Arabia. I believe some measures are being done to ensure the families are not broken up. Amnesty International has come out strongly against these deportation as it makes people on both sides of the conflict, the real victims of the conflict. I am certain the Arab countries are now sourcing the labor market, and will be bring in many laborers from Pakistan and the Philippines. I have not confirmation on this- it’s really just my hunch. Once deportation begin, it will be difficult to undo through negotiations.
The outsiders, including Russia, France and the US, plus the non-aligned Arab countries of Kuwait and Oman, all want to help in negotiating a lifting of sanctions. But, it remains confused at what would satisfy the main actors (Saudi Arabia, Egypt, UAE and Bahrain) in this blockade. Qatar is not about to “rein in” Al Jazeera, in essence, make it less effective a news network. It is in daily competition with all other news outlets, and given the widespread use of satellite television, their major competitors are the BBC, CNN and Euronews, at least for the English speaking world. And they are doing very well. Qatar denies they have any connection with Hamas or any terrorist organizations.
This type of sanctions usually don’t work. All they will accomplish is to cause hardships for Qatar and the companies and investors doing business with Qatar. Those who financed Qatar’s rise in the world, were likely rich Persian Gulf investors, buying Qatari bonds, which would be “safe” investments. They are likely taking a big hit. The blockade can be lifted easily, but it seems things are at a stalemate. On the other hand, there are opportunities to escalate the situation. Qatar could cut the gas supplies to UAE through their pipeline, but this would likely backfire, and Qatar would be the bigger loser. Other Arab countries would step up their gas supplies to the UAE and the Saudi blockage would gain more unity. The Arab countries can through controlling the airspace, effectively ground Qatar Air without much repercussions. They seem to want to put Qatar Air out of business. Stopping Qatari LNG carriers passing through the Suez canal, would violate international laws, but it is still a potential step. Yemen controls the Gulf of Aden, so this would be the place to extract more economic harm to Qatar.
I have no idea of how this mess can end. The most recent series of terrorist attacks, in the Philippines and Iran, suggest the Sunni based ISIS is still the number one instigator of secular violence in the world, not tied in anyway to Qatar. Trump is still going nuts pushing his travel ban, but it is equally likely that the next outside terrorists to land on our shores (there has been very few of them) is equally likely to come from Saudi Arabia, Pakistan, France, Belgium, UK or the Philippines, rather than Libya, Sudan or Syria (countries named in the travel ban). Actually, the next terrorists to cause bloodshed in the US, are more likely to be US permanent residents or citizens, than agents from any other country. It is all politics, and getting uglier by the day.