MTECHTIPS:-Crude settles lower after Arab nations severe ties with
MTECHTIPS:-Crude settles lower after Arab nations severe ties with Qatar
MTECHTIPS-Crude futures tumbled to settle lower, after Saudi Arabia and other Arab states severed diplomatic ties with Qatar, fuelling concerns about a disruption to the global deal to curb the glut in supply. On the New York Mercantile Exchange crude futures for July delivery fell 0.55% to settle at $47.40 a barrel, while on London’s Intercontinental Exchange, Brent dipped by 1% to trade at $49.44 a barrel. Crude futures initially rose, as investors anticipated that supply disruptions could support oil prices following news that a group of Arab nations, led by Saudi Arabia, severed diplomatic ties with Qatar, accusing it of fuelling terrorism. Gains, however, were short-lived, as fears grew that geopolitical tensions in the Middle East could threatened the Organization of the Petroleum Exporting Countries’ (Opec) accord to tackle oversupply in the industry, which has pressured prices over the last three years. Qatar with a production capacity of about 600,000 barrels per day (bdp) is one of Opec’s smaller oil producing nations. Investors fear that should geopolitical tensions in the Middle East escalate, Qatar may abandon its production quota previously agreed under the Opec deal, which could derail the global pact to extend production curbs until March. “This means Qatar may have little reason to keep the production quota and if that happens, it might encourage other OPEC members to cheat too.” Phin Zibell, Senior Analyst at National Australia Bank said.
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