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Oil tumbles 1% as Middle East bust-up over Qatar’s alleged support of Iran spooks traders

Middle East row: The oil price fell after six Arab countries severed links with Qatar

Oil prices tumbled on fears a furious political row in the Middle East over Qatar’s alleged support of Iran and Islamist terrorists will disrupt efforts to cut production.

Brent Crude fell more than 1 per cent towards $49 a barrel after six Arab countries including Saudi Arabia, the United Arab Emirates and Egypt severed diplomatic and transport links with Qatar.

It is thought the falling oil price could see petrol prices on British forecourts dropping as low as 110p a litre in the coming months.

The Qatari stock market also tumbled more than 7 per cent as Saudi accused the authorities in Doha of ‘grave violations’ to destabilise the region – including offering support to ISIS, the Muslim Brotherhood and Al-Qaeda and ‘Iranian- backed terrorist groups’.

Qatar – a major investor in the UK with stakes in Sainsbury’s, Barclays, Heathrow, British Airways owner IAG and Canary Wharf – said the move was ‘unjustified’ and with ‘no basis in fact’.

The price of oil swung wildly, first rising above $50 a barrel on warnings the escalating dispute could hit supply.

But crude then fell sharply amid fears the row would in fact hamper efforts to cut production at a time when supply is outstripping demand.

Olivier Jakob, a strategist at Petromatrix, said a breakdown in relations between Qatar and other Opec members such as Saudi could make it harder for the cartel to agree on production cuts.

Any attempt to financially punish Qatar could have an impact on its investments in the UK.

Qatar, which hosts the football World Cup in 2022, is the source of 90 per cent of the UK’s liquefied natural gas imports which are used to heat millions of homes.

The RAC motoring group said the fall in the oil price could benefit British drivers.