Qatar Diplomatic Crisis

Qatar Diplomatic Crisis
5th June 2017 a diplomatic crisis hit Qatar with seven countries.  Saudi Arabia, Bahrain, United Arab Emirates, Egypt Yemen, Libya and the Maldives announced they are cutting all diplomatic ties with Qatar which came as a shock to the rest of the World. Reason? – Saudi Arabia made an announcement via Saudi Press Agency, stating it was taking this step to protect its national security from the dangers of terrorism and extremism and it is believed the rest of the countries have the same reasons for cutting its diplomatic ties with the tiny Gulf nation.

USOUSD         Source: GO Markets MT4

Country profile – Qatar

Capital: Doha
Official language: Arabic
Currency: Riyal (QAR)
Population: 2,675,522 (2016)
GDP total: $353,143 billion
Qatar is a member of OPEC (Organization of the Petroleum Exporting Countries)

What has happened so far?
» The five Arab states have cut off land, air and sea travel to and from Qatar
» The Foreign Ministry of Bahrain have issued a statement to order all diplomats to leave Doha within 48 hours and that all Qatari diplomats should leave Bahrain within the same timeframe
» All the involved countries have ordered their citizens to leave Qatar
» Saudi Arabia, United Arab Emirates have given Qatari nationals two-week timeframe to leave their countries
» Qatar has been expelled from the Saudi led intervention in Yemen
» Saudi Arabia, the UAE, Bahrain and Egypt have all said they will close their airspace to Qataris national airline – Qatar Airways
» All major airlines, including – Emirates, Etihad Airways, Gulf Air, EgyptAir, Air Arabia, Saudi Arabian Airlines and FlyDubai have suspended their flights to and from Qatar
» Qatar Airways have also suspended their flight operation to Saudi Arabia
 
Qatar has since responded to the shock announcements and has called the decisions ‘unjustified’. The statement reads ‘The measures are unjustified and are based on claims and allegations that have no basis in fact’ and it added that the decision will ‘not affect the normal lives of citizens and residents’.
The impact
It is still too early to see what the effect the diplomatic crisis with have on Qatar’s economy, but since the announcement was made the oil prices moved lower, raising further uncertainty about the oil productions in the Middle East. Oil prices have dropped more than 4% in the last week, the largest decline since early May.

USOUSD         Source: GO Markets MT4

Another concern for Qatar is the border, the only way in by land is the border with Saudi Arabia. Every day there are hundreds of lorries which cross the border to supply Qatar with different supplies and one of the main supplies is food, in fact around 40% of Qatar’s food supplies is believed to come via this route, so it is a big concern for Qatar.

It is worth keeping up with further developments in this matter as it could have an impact in the oil markets.

-By Klavs Valters
GO Markets