Oil prices fell
further below $50 a barrel on Tuesday on concerns that a diplomatic rift
between Qatar and several Arab states including Saudi Arabia could
undermine efforts by OPEC to tighten the market.
Benchmark
Brent crude oil LCOc1 was 15 cents a barrel lower at $49.32 by 0755
GMT, down around 8 percent from the open of futures trading on May 25,
when an OPEC-led policy to cut oil output was extended into the first
quarter of 2018.
Leading Arab powers including Saudi Arabia, Egypt and the United Arab Emirates cut ties with Qatar on Monday, accusing it of support for Islamist militants and Iran.
Steps taken include preventing ships coming from or going to the small peninsular nation from docking at Fujairah, in the UAE, used by Qatari oil and liquefied natural gas (LNG) tankers to take on new shipping fuel.
With oil production of about 620,000 barrels per day (bpd), Qatar is one of the smallest crude producers in the Organization of the Petroleum Exporting Countries, but some investors fear tension within the cartel could weaken its agreement to hold back production in order to prop up prices.
Greg McKenna, chief market strategist at futures brokerage AxiTrader, said there was "a real chance" OPEC solidarity surrounding its production cuts may fracture.
"The OPEC agreement stands and is highly unlikely to change because of tension with Qatar. Crude production in the Middle East will not change because of Qatar," said Oystein Berentsen, managing director for oil trading company Strong Petroleum.
Leading Arab powers including Saudi Arabia, Egypt and the United Arab Emirates cut ties with Qatar on Monday, accusing it of support for Islamist militants and Iran.
Steps taken include preventing ships coming from or going to the small peninsular nation from docking at Fujairah, in the UAE, used by Qatari oil and liquefied natural gas (LNG) tankers to take on new shipping fuel.
With oil production of about 620,000 barrels per day (bpd), Qatar is one of the smallest crude producers in the Organization of the Petroleum Exporting Countries, but some investors fear tension within the cartel could weaken its agreement to hold back production in order to prop up prices.
Greg McKenna, chief market strategist at futures brokerage AxiTrader, said there was "a real chance" OPEC solidarity surrounding its production cuts may fracture.
"The OPEC agreement stands and is highly unlikely to change because of tension with Qatar. Crude production in the Middle East will not change because of Qatar," said Oystein Berentsen, managing director for oil trading company Strong Petroleum.
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