Oil markets and energy equities move sharply after Saudi Arabia and its allies cut their relations with neighbour Qatar. But as Silvia Antonioli reports, the economic consequences could go beyond that.
Forget the OPEC deals. What's moving oil prices and energy stocks right now is a spat between bad neighbours. Oil giant Saudi and its regional allies have cut their ties with Qatar suspending transport links and even expelling its citizens. The UAE, Egypt and Bahrain, as well as Saudi, accuse the world's top supplier of natural gas of supporting terrorism. But the rift follows an escalating dispute over Qatar's backing of Islamist movement the Muslim Brotherhood and accusations that it even follows the agenda of their arch-rival: Iran. SOUNDBITE (English) IG SENIOR ANALYST, CHRIS BEAUCHAMP, SAYING: "Clearly there is more of an Iran dynamic coming through here and you are witnessing a Saudi Arabia that is fundamentally more nervous about its place than it has been for a long time. And again the oil market feeds into it, the worries about its cash position and how they can continue to fund their large defence budget." Saudi state news agency SPA broke the news saying Qatar supports groups including ISIS and al-Qaeda through its media, in an apparent reference to its influential TV channel al Jazeera. Ethihad Airways, Emirates Airline and Flydubai are suspending all flights to and from Doha and Qatar Airways has responded by cancelling all Saudi-bound routes. UPSOT (English) U.S. SECRETARY OF STATE REX TILLERSON, SAYING: "We certainly would encourage the parties to sit down together ..." the U.S. is trying to act as a peacemaker. But analysts say Saudi might have been emboldened by the strength of its ties with the States revitalised by a recent visit of President Donald Trump. And just as Saudi prepares to list its oil champion Saudi Aramco on stock markets. The consequences could be tough for Qatar. Its stockmarket has tanked. And there are fears the spat could even casts doubt over its ability to host the 2022 World Cup.