Markets tumbled on news of Qatar's falling out with several of its Arab neighbours. The main stock index fell over 7 percent. Oil prices were up. And sport has been affected.

Traders at the Qatar Stock Exchange in Doha, Qatar, June 5, 2017.
Traders at the Qatar Stock Exchange in Doha, Qatar, June 5, 2017. (AA)

Qatar's stock market tumbled on Monday after Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed ties with Doha, accusing it of supporting terrorism.

The Qatari stock index sank 7.6 percent in the first hour of trade with Vodafone Qatar, the most heavily traded stock, sliding to its 10 percent daily limit.

Qatar National Bank, the country's largest bank, dropped 5.7 percent.

With an estimated $335 billion of assets in its sovereign wealth fund, a trade surplus of $2.7 billion in April alone and extensive port facilities which it can use instead of its land border with Saudi Arabia, Qatar appears likely to be able to avoid a crippling economic crisis. However, there could be short-term shortages of consumer goods that are brought in from Saudi Arabia.

The six countries in the Gulf Cooperation Council do little merchandise trade with each other, instead relying on imports from outside the region, and Qatar's liquefied natural gas shipments by sea are expected to continue normally.

Saudi Arabia and other GCC countries traditionally account for only about five to 10 percent of daily trading on the Qatari stock market, according to exchange data.

Oil prices rise on Qatar rift

The news of the Qatar crisis sent the price of crude oil higher on Monday.

The move pushed Brent crude prices up 35 cents, or 0.7 percent, to $50.30 a barrel by 0836 GMT, having risen as much as one percent earlier in the session.

With a production capacity of about 600,000 barrels per day (BPD), Qatar's crude oil output is one of OPEC's smallest.

But tensions within the Organization of the Petroleum Exporting Countries could potentially impact on an agreement to cut production in order to support global prices.

"I think it's still going to be a bit of a debate on the true impact it can have on the oil market," said Olivier Jakob, strategist at Petromatrix.

Impact on various economic sectors

The diplomatic rift could have a serious impact on some business deals and companies in the region, particularly Qatar Airways, which can no longer fly to some of the Middle East's biggest markets.

Starting Tuesday morning, Abu Dhabi's airline carriers, Etihad Airways, Dubai's Emirates and FlyDubai decided to suspend all flights to and from Doha.

Airlines from Bahrain and Egypt are expected to follow suit.

Some Egyptian banks have halted dealings with Qatari banks, four Cairo-based bankers said.

Meanwhile, Saudi Arabia called on international companies to avoid Qatar, raising the prospect that it might try to make foreign firms choose between doing business in Qatar and obtaining access to the much bigger Saudi economy.

As the country has closed its land border to Qatar, there are reports that trucks carrying food for Qatar are now lining up across the border in Saudi Arabia, unable to enter the country. This could mean significant trouble for Qatar, which relies on food trucked in from Saudi Arabia.

Supermarkets stormed

Eva Tobaji, an expat resident in Doha, said: "People have stormed into the supermarket hoarding food, especially imported ones ... It's chaos - I've never seen anything like this before."

Trade sources pointed to the likelihood of food shortages growing until there was a resolution of the crisis. About 80 percent of Qatar's food requirements are sourced via bigger Gulf Arab neighbours, such as the UAE and Saudi Arabia.

"There will be a crisis for them maybe in the next month or so until they figure out their supply chain," another Middle East trade source said. "The situation as it now stands is like a siege."

Saudi Arabia's Ports Authority notified shipping agents on Monday not to receive vessels carrying Qatari flags or ships that are owned by Qatari companies or individuals.

The move followed a similar step by the UAE port of Fujairah, which issued a notice barring all vessels carrying Qatari flags and any destined for or arriving from Qatari ports.

Al Ahli, one of Saudi's football clubs also cancelled a Qatar Airways sponsorship deal.

World Cup in focus

FIFA, International soccer's governing body says it remains in "regular contact with Qatar" amid the escalating diplomatic row.

It issued a short statement Monday saying it spoke with "the Qatar 2022 Local Organizing Committee and the Supreme Committee for Delivery & Legacy handling matters relating to the 2022 FIFA World Cup."

It said, "We have no further comments for the time being."

Source: TRTWorld and agencies