The diplomatic rift between Saudi Arabia and Qatar will take a huge toll on companies such as Qatar Airways that depend hugely on regional integration.
The face-off between Qatar and GCC countries might take a turn for the worse as analysts predicted a higher trend in crude prices.
Saudi Arabia, the UAE and Bahrain including Egypt have just severed ties with Qatar over allegations that the country is supporting and funding terror groups in the Middle East.
The matter has escalated into a full-blown diplomatic crisis as Saudi Arabia has now given Qatari nationals and diplomats an ultimatum to leave its borders.
Trading on Qatar’s stock exchange took a hit as major stocks within its index took bite the dust. According to data supplied by Reuters, the Qatari stock index sank 7.6 percent in the first hour of trade. Some of the market’s top blue chips were hit hardest, with Vodafone Qatar, the most heavily traded stock, sliding its 10 percent daily limit.
Qatar National Bank, the country’s largest bank, dropped 5.7 percent.
Unless there is a quick de-escalation in the row, the oil market is expected to take an upswing. As at the time of writing the report, Brent crude has already gained 1% in price, analysts predict more increase in price.
Qatar’s major companies might take in huge losses due to the row. Qatar Airways will no longer be able to enter affected countries. These markets are one of its major routes.
In response to the matter, Qatari foreign ministry said: “The campaign of incitement is based on lies that had reached the level of complete fabrications”.
The tone of the response is not sounding conciliatory and matters might further escalate in the following days.
Implication for Nigeria
Nigeria heavily depends on crude exports for more 70% of foreign exchange earnings. An upswing in price means the country will get more for its crude oil.
Forcados, Nigeria’s largest crude loading terminal is expected to load about 197,000 barrels per day after a year of inactivity caused by vandalisation.
Oando, one of Nigeria’s largest indigenous crude exporter said the country is expected to hit the 2.2 million barrel quota given by OPEC.
Nigeria’s has been battling a deep recession that saw the country’s currency, Naira, losing 70% of its value against the Dollar, USD. The Central Bank has kept the benchmark interest rate unchanged at 14% following the first quarter GDP result which showed the economy contracted by 0.05% in the first quarter of the year.
