Saudi Arabia and four other Middle East nations severed all ties with Qatar — the world’s top seller of Liquefied Natural Gas (LNG) — for allegedly supporting extremism. As a result, the price of oil has been affected.
Oil prices dropped by one per cent following concerns over the fallout between the Gulf countries. According to reports, the news initially pushed Brent crude future prices up as much as one per cent as geopolitical fears rippled through the market. But Brent later reversed gains, trading down 58 cents, or 1.12% at US$49.37 a barrel.
The Saudi Press Agency said, “(Qatar) embraces multiple terrorist and sectarian groups aimed at disturbing stability in the region, including the Muslim Brotherhood, ISIS (Islamic State) and Al-Qaeda, and promotes the message and schemes of these groups through their media constantly.”
The diplomatic rift has affected the transport links that ship vessels to and from Qatar. Saudi Arabia, United Arab Emirates, Bahrain along with Egypt have joined forces to reinforce the situation. At present, the vessels are stalled in the Fujairah zone and will soon have to be moved out.
The crisis is said not to affect oil exports outside the Arab region. Japan and India were reassured that oil supplies won’t be disturbed under any circumstances.
Morten Frisch, an independent LNG and gas industry consultant said, “I cannot see this impacting exports of Qatari LNG outside the Arab world at all and it won’t likely impact LNG and gas pipeline exports within the Arab world either.”
However, if Qatar chooses to, it can issue destination restrictions to prohibit exports to select countries.