Saudi, Allies Cut Qatar Ties, Oil Left in the Cold
The diplomatic spat has not affected shipments but any further escalation could raise the prospect of supply disruptions from the Middle East
Oil erased earlier gains as a diplomatic clash involving Opec members Saudi Arabia and Qatar was seen having limited impact on the group’s policy. Futures slipped 0.6% in New York, erasing an earlier gain of 1.6%. Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said they will suspend air and sea travel to and from Qatar, escalating a crisis that started over its relationship with Iran. The nation still has access to shipping routes to deliver oil and gas to buyers around the world.
While the diplomatic spat hasn’t affected shipments, any further escalation could raise the prospect of supply disruptions from the Middle East, including Organization of Petroleum Exporting Countries (Opec) members Saudi Arabia, Iran and Qatar. The nations all use the Strait of Hormuz, through which the US Department of Energy estimates about 30% of seaborne oil trade passes. Crude had fallen in three of the previous four sessions amid concern that an extension of Opec’s cuts won’t be enough to shrink global inventories as US output expands.
“Given the persisting bearish sen- timent in the oil market, the unprecedentedmovemightnothavea long-lasting impact on oil prices, but it is worth keeping in mind,” said Tamas Varga, an analyst.