Qatar diplomatic crisis

• Qatar has been cut off and isolated by some of the Arab world's most powerful countries, which have accused it of supporting terrorist groups.
• Bahrain, Saudi Arabia, the United Arab Emirates (UAE), and Egypt withdrew their ambassadors from Qatar. Yemen, the Maldives and Libya's eastern-based government all later followed suit.
• Saudi Arabia, the UAE and Bahrain have given all Qatari nationals two weeks to leave their territory. The three countries have also banned their citizens from travelling to Qatar.

Analysis

• Qatar has allegedly practising an ambitious foreign policy with different priorities to its neighbours. Qatar's support for regional Islamist groups, including the Muslim Brotherhood, which is designated a terrorist group by some Gulf countries. Also, its relations with Shia-led Iran have resulted into this situation.
• Oil prices are always sensitive to geopolitical tensions and the prospect of any disruption to production.
• Saudi Arabia, the UAE and Qatar are all members of the Organisation of the Petroleum Exporting Countries (Opec). Saudi Arabia is the de facto leader of the group as the largest oil producer in the world, while Qatar is one of Opec’s smallest oil producers. The group recently agreed to cut oil production to help prop up prices; some investors are concerned that the dispute with Qatar could affect that deal. That plan to boost prices has also been undermined by rising oil output in the US.
• Indians are the largest expatriate community in Qatar, the same way they are in Saudi Arabia and the UAE — the two key countries that are in the opposite camp. And, the immediate worry is the trouble Indians would face as measures to isolate Qatar would hit them there in terms of their travel.
• India also has robust defence and energy ties with Qatar. India is the third largest export destination for Qatar (behind Japan and South Korea) and ranks at 10th position for Qatar’s imports.
• The Gulf Arab state is the largest supplier of LNG to India, accounting for over 65% of India’s global import and 15% of Qatar’s export of LNG with an annual import of 7.5 million metric tons (MMT) of liquefied natural gas (LNG) under a long-term contract between Petronet LNG of India and RasGas Co Ltd of Qatar, and some spot purchases by Indian companies from time to time.
• India also imports ethylene, propylene, ammonia, urea and polyethene from Qatar. Therefore, the balance of trade continues to be heavily in Qatar’s favour.
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By: Vishal