Oil price surges as Gulf states cut Qatar ties
The oil price has jumped this morning after a group of Gulf states cut diplomatic relations with Qatar.
In a dramatic development Saudi Arabia, Egypt, the United Arab Emirates and Bahrain all announced early today they were severing ties with Doha and calling their diplomatic staff home.
They accused the Qatar leadership of supporting terrorism in the region, and destabilising the Gulf, through its support for Islamist groups and its relations with Iran.
Peter Hoskins
(@PeterHoskinsTV)Saudi Arabia, Bahrain, Egypt cut diplomatic ties with Qatar, escalating crisis over Qatar relationship with Iran, Muslim Brotherhood support
Associated Press explains:
Saudi Arabia said it took the decision to cut diplomatic ties due to Qatar’s “embrace of various terrorist and sectarian groups aimed at destabilizing the region” including the Muslim Brotherhood, al-Qaida, the Islamic State group and groups supported by Iran in the kingdom’s restive eastern province of Qatif. Egypt’s Foreign Ministry accused Qatar of taking an “antagonist approach” toward Egypt and said “all attempts to stop it from supporting terrorist groups failed.”
The tiny island nation of Bahrain blamed Qatar’s “media incitement, support for armed terrorist activities and funding linked to Iranian groups to carry out sabotage and spreading chaos in Bahrain” for its decision.
The four countries are suspending air and sea travel, and Saudi Arabia is also cutting its road crossings.
As this map from Bloomberg shows, this would block Qatar from accessing the rest of the region by land.
Energy traders were quick to respond to the escalating crisis, sending Brent crude up by $1 per barrel to $50.42.
Qatar is the biggest supplier of liquefied natural gas (LNG), and those supplies could potentially be disrupted if this row deepens.
Holger Zschaepitz
(@Schuldensuehner)Oil jumps after Saudi Arabia, Egypt, United Arab Emirates & Bahrain severed their ties w/ Qatar, accusing Gulf state of supporting terrorism pic.twitter.com/69eD7aep37
RANsquawk
(@RANsquawk)Middle east tensions see crude prices jump over 1% as several nations cut ties with Qatar.
Updated
Chinese services sector growth hits four-month high
China’s service sector has posted its fastest growth in four months, in an encouraging signal following some weak factory data last week.
Data firm Caixin reports that Chinese firms were boosted by a jump in new business last month, as client demand strengthened.
This sent the Chinese services PMI up to 52.8 in May, up from 51.5 in April, which is the highest reading since January.
That’s a boost to the region, especially as China’s manufacturing sector shrank in May.
While service sector companies took on more workers, manufacturing firms continued to pare back staff numbers, at the fastest rate since last September.
Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, says:
“The improvement in the services sector bolstered the Chinese economy in May. However, the rapid deterioration in the manufacturing industry is worrying. We need to closely monitor whether the diverging trends in manufacturing and services will widen further.”