Is Qatar about to become another riot-ridden Venezuela?
Seems likely now that the country’s lost its one and only land border to political skirmishes.
Saudi Arabia, the country’s only neighbor not separated by water, shut down the border this week, claiming Qatar’s actions are “destabilizing the region.”
Around the same time, the UAE, Bahrain, Yemen, and Egypt also cut ties. This leaves the country without essential connections to three of five fellow Gulf Cooperation Council members, and two high-ranking members of the Organization of Petroleum Exporting Countries.
Qatar is now facing major shortages of any and all supplies that usually come over the border from Saudi Arabia. Ports in the UAE have also shut down export operations as of this morning, for the time being preventing shipments out of Qatar from calling at their usual stops.
Airplanes going to and from the country have also been banned in five countries, making everyday travel impossible.
Now, you’d think this kind of drama would be wreaking havoc on the markets, particularly oil since so many OPEC members are involved.
And yet, with all of this going on, oil’s movements over the past two days have been pretty tame.
That’s because OPEC has been tearing itself apart for years, with the worst of the issues just coming to a head over the past few months…
OPEC has more than enough problems to deal with right now: the production cut isn’t enough to boost prices anymore, Saudi Arabia and Algeria are both trimming the fat wherever they can, Venezuela is the very definition of chaos, and now Qatar is losing ground on a bad reputation.
It doesn’t help that the first country to come to Qatar’s aid, offering overseas shipments of food, was Iran. The country is already on thin ice, as it’s got its own politically-driven issues with OPEC kingpin Saudi Arabia, and is one of the three member countries not contributing to the output cut.
Should the shunning of Qatar go on for just a day too long, it could be the next casualty of OPEC’s war upon itself. It won’t take long for the country’s citizens to start panicking with so many international resources suddenly cut off.
From a political point of view, it’s a scary situation to say the least.
But from an investment standpoint, I’m glad the majority of the market seems to have finally realized there’s no point panicking.
Oil will balance itself out as it’s done through numerous political skirmishes in the past. It’s only a matter of time now, and OPEC as we know it may not even be around to see it happen…
To continue reading about the political issues surrounding Qatar, click here to read the CNN article.