Facing embargoes, Iran and Qatar deepen trade ties

Cargo Containers stacked high on freight ship

August 28, 2018 - Iran and Qatar both face damaging trade embargoes, and they are increasing their commercial ties with each other to offset the damage. 

Saudi Arabia, Egypt, Bahrain and the UAE have had sanctions in place against Qatar since May 2017, motivated in large part by the Qatari government's relations with Iran. Qatar has developed alternate shipping routes to bypass its historic transshipment points in the UAE, and it has managed to shake off the worst of the effects of the embargo. Its status as the world's largest LNG exporter has continued unchanged, helping to insulate it from the regional restrictions. 

Tehran faces a much more damaging set of sanctions from the United States, which is reinstituting a near-total prohibition on trade with Iranian entities. In November, a second set of U.S. sanctions related to Iran's nuclear program will "snap back" into place, and foreign firms will be forbidden from conducting business with Iran's oil, shipping and shipbuilding sectors, or from conducting trade with Iran using U.S. dollars. 

In the face of these challenges, the two nations are boosting trade ties across the Persian Gulf. Iran's Financial Tribune reports that trade with Qatar in non-oil commodities has doubled in the four months since March (in dollar terms). Hadi Haqshenas, director of Tehran's Ports and Maritime Organization, has also suggested that Qatar wants to keep increasing shipping volumes between Doha's Hamad Port and Iran's Bushehr Port.

Bushehr is a transshipment point for overseas cargoes bound for Qatar, but it may offer less utility once U.S. sanctions enter into full effect. Many global shipping lines have already pulled out of Iran altogether due to the sanctions regime, forcing Iranian firms to rely more heavily on the nation's own fleet. 

Iran renews threats to close off Persian Gulf

In comments carried by Iran's Tasnim news agency, the head of the naval division of the Iranian Revolutionary Guards Corps (IRGC) said Monday that the U.S. Navy does not belong in the Persian Gulf. “We can ensure the security of the Persian Gulf and there is no need for the presence of aliens like the U.S. and the countries whose home is not in here,” said Gen. Alireza Tangsiri, the chief of the IRGC's navy. “All the carriers and military and non-military ships will be controlled and there is full supervision [of the area].”

Iran has previously threatened to close the strategic Strait of Hormuz in retaliation for renewed U.S. sanctions. The narrow strait at the mouth of the Persian Gulf handles tanker traffic totaling to about 19 million barrels of oil per day, an amount equal to one third of all seaborne petroleum trade.

Iran attempted to disrupt traffic in the strait once before, during the Iran-Iraq War of 1980-1988. Both sides struck each others' shipping during the conflict, and there were an estimated 340-450 attacks on merchant ships over the course of the war. The tally included attacks on hundreds of vessels flagged in neutral countries.

Source: The Maritime Executive