Oil finds buyers as regional allies in the Middle East cut ties with Qatar

Salah Malkawi/ Getty Images

Oil has caught a bid in Asian trade as geo-political tensions rise in the Middle East.

CNBC reported that Saudi Arabi, Egypt, Bahrain and the United Arab Emirates (UAE) have cut ties with their regional counterpart Qatar.

News of the diplomatic split sent oil and gas prices higher, due to the increased likelihood of supply disruptions if trade routes from Qatar are cut off.

Benchmark crude oil rose back above $US50 a barrel and West Texas Intermediate (WTI) was up by 1.35% a short time ago to $US48.30 a barrel.

According to CNBC, the dispute is centered around Qatar’s tacit support for the Muslim Brotherhood organisation, as well as its links with Saudi Arabia’s regional enemy Iran.

Saudi Arabia has subsequently cut all land and sea contact routes with Qatar. A spokesman for Saudi Arabia said the decision was in accordance with its sovereign right to protect itself from terrorism and extremism.

Close Saudi ally Bahrain and the UAE have followed suit in cutting land and sea routes.

CNBC reported that the state news agency of the UAE, which shares a border with Qatar, had issued orders for Qatari diplomats to leave the country.

Qatar is the largest exporter of natural gas globally ahead of Australia, and it shares the largest natural gas field in the world with Iran.

Qatar’s cooperation with Iran has angered Sunni-dominated Saudi Arabia, which is concerned about Iran’s support for Shia militants.

The CNBC report quoted Charles Lister, a senior fellow at US think tank the Middle East Institute, who said that Qatar relies heavily on food imports through Saudi Arabia.

In view of that, the retraction of land and sea trade routes would pose a signficaint challenge for decision makers in Doha, the Qatari capital city.

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