Oil prices jump after saudi arabia and arab allies cut ties with qatar

Oil prices jump after Saudi Arabia and Arab allies cut ties with Qatar

Saudi Arabia and key allies on Monday cut ties with Qatar,

accusing it of supporting extremism, sending shockwaves through the energy industry as the countries involved include the world's top oil and liquefied natural gas (LNG) exporters.

Saudi Arabia, the world's biggest crude oil exporter, along with the United Arab Emirates, Egypt, and Bahrain said they would sever all ties including transport links with Qatar, the top LNG exporter in the world. The three Gulf countries said they will give Qatari visitors and residents two weeks to leave. "(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," Saudi state news agency SPA said .

While the announcements did not immediately affect oil shipments, benchmark Brent crude futures prices rose over 1 percent to well over $50 per barrel following the news.

Meanwhile, Petronet LNG said on Monday it did not expect any impact on gas supplies from Qatar after Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed ties with the Gulf Arab state accusing it of supporting terrorism.

"I don't think there will be any impact on it. We get gas directly from Qatar by sea," R.K. Garg, head of finance at Petronet, told Reuters when asked to comment on the coordinated move to cut relations.Petronet LNG, India's biggest gas importer, buys 8.5 million tonnes a year of liquefied natural gas (LNG) from Qatar under a long-term contract. It also buys additional volumes from Qatar under spot deals.

The coordinated move dramatically escalates a dispute over Qatar's support of the Muslim Brotherhood, the world's oldest Islamist movement, and adds accusations that Doha even backs the agenda of regional arch-rival Iran.The three Gulf states announced the closure of transport ties with Qatar and gave Qatari visitors and residents two weeks to leave their countries. Qatar was also expelled from a Saudi-led coalition fighting in Yemen.

These were more severe measures than during a previous eight-month rift in 2014, when Saudi Arabia, Bahrain and the UAE withdrew their ambassadors from Doha. At that time, travel links were maintained and Qataris were not expelled.

A split between Doha and its closest allies can have repercussions around the Middle East where Gulf states have used their financial and political power to influence events in Libya, Egypt, Syria, Iraq and Yemen.

READ MORE

ARTICLE SOURCE – BUSINESS STANDARD