Oil Update: Gulf diplomatic standoff sends price tumbling

Oil fell back following a brief recovery after Saudi Arabia and several other Arab states severed ties with Qatar, accusing it of supporting extremism and undermining regional stability. 

Oil prices saw a rebound after the OEPC Meeting in Vienna, as the market was buoyant on the extending cuts into the next year. That rally however was short-lived as Libyan output increased substantially during the same week as the OPEC announcement which in turn nullified any gains.

Oil prices after peaking on May 24^th at 51.44 for Crude Oil WTI, the prices decreased by 3 dollars the next day as prices came tumbling down. Price took yet another dip yesterday as rising tension in the Gulf started to translate into the prices.

The prices for July 17 futures for WTI Crude Oil stands at $47.43, Whereas, prices for the same future dates for the Brent Crude are trading at 49.51%.

Oil prices are under pressure after several Arab powers including Saudi Arabia, Bahrain, the UAE and Egypt cut diplomatic ties with neighbor Qatar. 

Steps taken include preventing ships coming from or going to the small peninsular nation to dock at Fujairah, in the UAE, used by Qatari oil and liquefied natural gas (LNG) tankers to take on new shipping fuel.

The Gulf nation's stocks have hit a low not seen since January 2016. Yemen, Libya's eastern-based government, and the Maldives have also joined in on the coordinated move to sever ties. 

Some reports claim that Saudi and UAE banks are holding off on business with Qatari banks, such as letters of credit, awaiting guidance from central banks.

European markets are set to open lower amid a political rift between Qatar and several other Arab countries and as investors take a cautious approach ahead of a general election in the U.K. and a European Central Bank (ECB) meeting.

Escalating tensions in the Middle East, the impending testimony of the former FBI director, British elections and a European Central Bank meeting this week, all took their toll on Asian stocks, oil and the dollar on Tuesday.