Brent crude oil above $50 as four Middle Eastern countries cut off Qatar

Oil prices have risen sharply after four Middle Eastern countries led by Saudi Arabia cut off diplomatic ties to Qatar, with the Saudi border to Qatar closed.

Saudi Arabia, Egypt, the United Arab Emirates and Bahrain accused Qatar of supporting terrorism, escalating a simmering feud in the Persian Gulf.

The state-run Saudi Press Agency (SPA) said Saudi Arabia was “protecting its national security from the dangers of terrorism and extremism”, citing an official source.

Futures prices for West Texas Intermediate (WTI) crude oil rose by as much as one per cent to reach highs of $48.42 per barrel, while futures for Brent crude oil rose above $50 per barrel as investors anticipated disruption to oil supplies.

The Qatari riyal fell by 0.19 per cent against the US dollar at the time of writing, while the Qatar Exchange index of stocks listed in the capital, Doha, plummeted by more than seven per cent to its lowest point since the start of 2016.

The diplomatic cut-off threatens to add further instability to the region, as the longstanding sectarian rivalry between the Sunni-dominated Saudi Arabia and Shia-led Iran creates new diplomatic tension.

A separate statement on SPA accused Qatar of supporting terrorist and sectarian groups “including the Muslim Brotherhood, Isis and al-Qaeda” and of broadcasting propagating through Qatari media, according to Reuters.

Qatari residents have two weeks to leave the countries, while flights from the Abu Dhabi state-backed Etihad Airways to Doha will be suspended from Tuesday morning “until further notice”.

In a statement published on its website Qatar’s foreign ministry said the allegations were “not justified” and were based on “unfounded” claims. The statement also said the move would “not affect the normal life” of citizens, despite the imposition of bans on travel.

Let's block ads! (Why?)