London: Oil prices fell more than 1 per cent on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production.
Saudi Arabia, UAE, Egypt and Bahrain closed transport links with top liquefied natural gas (LNG) and condensate shipper Qatar, accusing it of supporting extremism and undermining regional stability.
The move initially pushed Brent crude prices up as much as 1 per cent as geopolitical fears rippled through the market. But Brent later reversed gains, trading down 59 cents at $49.36 a barrel by 1322 GMT.
US West Texas Intermediate futures were at $47.14 a barrel, down 52 cents.
With production capacity of about 6,00,000 barrels per day (bpd), Qatar’s crude output is one of Opec’s smallest but tension within the Organization of the Petroleum Exporting Countries could weaken the supply deal, aimed at supporting prices.
“I think it’s still going to be a bit of a debate on the true impact it can have on the oil market,” said Olivier Jakob, strategist at Petromatrix.
