Commodities: Crude sinks as Saudi et al cut diplomatic ties with Qatar

Crude-oil futures rounded lower on Monday as traders already nervy about Opec's extended output curbs took fright at four Middle East countries today cutting diplomatic ties with Qatar.

Saudi Arabia, Bahrain, Egypt and United Arab Emirates all severed diplomatic ties with their Middle Eastern neighbour, accusing it of meddling in their internal affairs and backing terrorism.

Qatar refuted these allegations, but the impact of the tensions it sparked saw crude's early gains reverse into the red this afternoon.

At 15:37 BST, Nymex-priced West Texas Intermediate crude was down 1.03% to $47.17 a barrel. Intercontinental Exchange-traded Brent shed 1.12% to $49.39 a barrel.

Henry Croft, research analyst at Accendo Markets, noted that Brent had fallen back below the "key psychological $50 level".

Craig Erlam, senior market analyst at Oanda, added that WTI and Brent were languishing near last week's lows,.

Traders, he said, appeared to "doubt whether the coordinated measures undertaken by Opec and non-Opec members will be enough to address the oil glut."

Michael Hewson, chief market analyst at CMC Markets UK, said any escalation of tension in this region -- particularly given the narrowness of the Straits of Hormuz -- was not generally viewed through a positive lens.

"With oil prices near one month lows we did initially see some cautious buying, however given how small Qatar is in terms of output today's rally soon gave way to further selling pressure, as fears about Opec disruption were put to one side."

Meanwhile, on Comex, gold rose 0.27% to $1283.7 an ounce. Silver added 0.57% to $17.63 an ounce, and copper fell 0.64% to 255.80 cents a pound. All were off earlier lows.

"Gold prices have risen to their highest levels since late April on some risk aversion buying, post the weekend attacks as well as rising expectations that the US Fed’s tightening cycle may not be as aggressive as we head into the rest of the year," opined Hewson.

On London Metals Exchange, three-month industrial metals were mostly lower. Copper was down 0.6%, zinc 1.6% and tin 0.73%, while aluminum rose 0.21%.