Oil falls 1 percent on fears Mideast rift could harm OPEC cuts
By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices fell nearly 1 percent on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production.
Saudi Arabia, the United Arab Emirates, Egypt and Bahrain closed transport links with top liquefied natural gas (LNG) and condensate shipper Qatar, accusing it of supporting extremism and undermining regional stability.
The news initially pushed Brent crude prices up as much as 1.6 percent as geopolitical fears rippled through the market. But August Brent prices ended the session 48 cents or 0.96 percent lower at $49.47 a barrel.
U.S. West Texas Intermediate futures settled 26 cents or 0.55 percent lower at $47.40. U.S. gasoline futures led the energy complex lower, falling about 2.5 percent to settle at $1.5381 a gallon, on technical selling, brokers said.
With production capacity of about 600,000 barrels per day (bpd), Qatar's crude output ranks as one of the smallest among the Organization of the Petroleum Exporting Countries, but tension within the cartel could weaken the supply deal aimed at supporting prices.
"While we would not want to read too much into this in terms of looming trouble for OPEC, the fact that Qatar's stance towards Iran is a key element in this issue does make for a potentially more complicated setup at future meetings should the issue not have been resolved in due time," JBC Energy analysts said in a note.
The deal has shown little indication of significantly denting exports. While OPEC supplies dipped between February and April, a report on Monday by Thomson Reuters Oil Research said OPEC shipments likely jumped to 25.18 million bpd in May, up over 1 million bpd from April.
Brent futures have fallen more than 8 percent from their open on May 25, when OPEC opted to extend production cuts into 2018. Continued...