Today’s stunning expulsion of Qatar from the Saudi “circle of friends” prompted some analysts to ask if in Qatar’s immediate futures is a departure from OPEC. In a note by Mitsubishi UFJ, the bank notes that ‘a full-fledged confrontation will, without any doubt, put pressure on the current compliance rate of OPEC members to the adherence of the 9-month agreement to cut production” and adds that “whilst Qatar’s pledge was only to cut 30,000 barrels to 628,000 barrels (as part of the OPEC agreement), there are potential risks of Qatar leaving OPEC which could significantly impact oil prices.”
That said, the political fallout for Qatar, and its remaining allies, could have broader implications than merely the collapse of the already dying oil cartel; as MUFJ notes ‘a rapprochement between Iran and Qatar would be a vast security risk to the U. S. military” while closure of land/sea/air contacts could have adverse “implications for the airlines, shipping and road freight industries.”
According to analysts and pundits cited by the BBC, the biggest threats facing the tiny but rich nation, with a population of 2.7 million, include food, flights, construction, people, trade and… football.
Flights
As reported overnight, Abu Dhabi’s Etihad Airways and Dubai’s Emirates are suspending all flights to and from Doha, starting from Tuesday morning. Both carriers operate four daily return flights to Doha. Budget carriers FlyDubai and Air Arabia are also cancelling routes to Doha, with other airlines, including Bahrain’s Gulf Air and Egyptair expected to follow suit. It comes after Saudi Arabia, the UAE, Bahrain and Egypt all said they would stop flights in and out of Qatar, and close their airspace to the country’s airline, Qatar Airways.
This post was published at Zero Hedge on Jun 5, 2017.
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