The tensions between Gulf States and Qatar has been brewing for a while. Qatar is seen as a close ally of Iran and a has moved away from being a broker in the region’s many conflicts. The news puts the Trump administration in a delicate situation as it maintains an army base in Qatar but at the same time has clearly shifted its foreign policy towards Saudis and increased its opposition on Iran.
From an economic point of view, Qatar is not a big producer of oil but is a major supplier of LNG . As such the markets quickly surmised that any disruption or blockade of Qatar’s primary export could benefit Australia which is becoming a major LNG player in its own right. Australia has more than $180 billion of liquefied natural gas export projects coming online, with developers planning to add about 53 million tonnes per annum (mtpa) of LNG production by 2017, an increase that would make the country the world’s top LNG exporter.
With US yields mired at their lowest level in months, the Aussie could also get support from carry trade flows especially if RBA reaffirms its neutral stance in tomorrow’s RBA meeting.