Oil jumps by 1.5% as Egypt, Saudi Arabia, Bahrain and the United Arab Emirates effectively create a land and air blockade of Qatar, Market Plus informed.
While the diplomatic spat hasn’t affected shipments, it raises the prospect of supply disruptions from the Middle East, including Organization of Petroleum Exporting Countries (OPEC)’s members, Saudi Arabia, Iran and Qatar. The nations all use the Strait of Hormuz, via which the U.S. Department of Energy estimates about 30% of seaborne oil trade passes. Crude had slipped below $50 a barrel amid concern that an extension of OPEC’s cuts won’t be enough to shrink global inventories as U.S. output expands, Bloomberg stated.
“On the face of it, it could present a risk, but I don’t think there is too much in the Qatar situation,” said Daniel Hynes, an analyst in Sydney at Australia & New Zealand Banking Group Ltd. “Geopolitical risks haven’t really been that influential in recent times and I don’t think that will change too much”, he added.