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Oil subdued on worries Middle East rift will sap efforts to cut output

Published 06/06/2017, 10:49 am
Updated 06/06/2017, 10:50 am
© Reuters.  Oil subdued on worries Middle East rift will sap efforts to cut output
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By Henning Gloystein

SINGAPORE, June 6 (Reuters) - Oil recovered some losses from the previous session on Tuesday, but Brent crude remained below $50 over concerns that a political rift between Qatar and several Arab states would undermine efforts by OPEC to tighten the market.

Brent crude futures LCOc1 were trading at $49.61 per barrel at 0027 GMT, up 14 cents from their last close but still almost 8 percent below 25 May, when an OPEC-led policy to cut oil output was extended to cover the first quarter of 2018.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $47.51 per barrel, up 11 cents from their previous close, but down 7.3 percent from May 25.

The Arab world's biggest powers cut ties with Qatar on Monday, accusing it of support for Islamist militants and Iran. taken include closing down transport links with Qatar and preventing ships coming from or going to the small peninsular nation. That includes the port and docking area of Fujairah, in the United Arab Emirates, used by Qatari oil and liquefied natural gas (LNG) tankers to take on new shipping fuel. production capacity of about 600,000 barrels per day (bpd), Qatar's crude output ranks as one of the smallest among the Organization of the Petroleum Exporting Countries, but tension within the cartel could weaken the supply deal aimed at supporting prices. potential risk to monitor might be that Qatar will view this as being provided with less encouragement to comply with the agreed production quota," said Jameel Ahmad of futures brokerage FXTM.

Although Qatar is a relatively small oil producer, other OPEC states could see such an action as a reason to stop restraining their own output, traders said.

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