Qatari demand for low sulfur fuel oil from Fujairah would bounce back following the restoration of diplomatic ties between Qatar and Saudi Arabia, the UAE and other Arab allies, traders said.

"It will not be illegal anymore to supply Qatar from the United Arab Emirates. Previously the Qatar demand was served from Singapore and now it will be served from Fujairah," said a trader based in Fujairah, one of the emirates that make up the UAE.

This week, Saudi Arabia said it was lifting its air, land and sea embargo on Qatar, and the UAE, Bahrain and Egypt are expected to follow suit, bringing relief to a crisis that has rocked the Gulf region. Qatar had been under embargo for more than three years after Saudi Arabia and the UAE severed diplomatic and transport links with their Gulf neighbor, which they accused of sponsoring Islamist groups and being too close to Iran.

"Qatar use traders so they will be able to make the switch (to Fujairah) easily as it's cheaper to supply Qatar from Fujairah so this will attract some of the demand," said a second Fujairah trader.

He added that before the embargo, Fujairah supplied Qatar with about 200,000 mt of fuel oil a month and this demand was expected to return. After the embargo, Qatar demand was redirected to Singapore and the trader said he expected it would now be served from Fujairah again.

Platts FOB Fujairah Marine Fuel 0.5% premium to MOPFUJ rose 25 cents to $8/mt on Jan. 6.