Qatar equities quake as Arab League states sever diplomatic ties

Qatar's stock market suffered its largest fall in almost a decade after Saudi Arabia led other Gulf states including United Arab Emirates and Egypt in cutting diplomatic ties, purportedly over protecting themselves from "terrorism and extremism".

Saudi Arabia also closed the border and halted air and sea traffic with Qatar, urging "all brotherly countries and companies to do the same".

The official Saudi state news agency said early on Monday that diplomatic and consular relations had been severed with Qatar "proceeding from the exercise of its sovereign right guaranteed by international law and the protection of national security from the dangers of terrorism and extremism", thought to be over its support for Islamist movements such as the Muslim Brotherhood and Hamas as well as its relationship with Iran.

Qatar may be a small state but the proceeds of being number one global producer of liquefied gas means its huge sovereign wealth fund wields much weight around the world, from the UK's Barclays to Russia's Rosneft. Qatar is also home to some 10,000 American troops based at the al-Udeid air base, the US military’s regional command centre.

Saudi, UAE and Bahrain on Monday gave Qatari visitors and residents two weeks to leave, Reuters reported, while several airlines including Emirates Airlines, UAE-based Flydubai and Abu Dhabi-based Etihad Airways said they would be suspending all Doha flights from Tuesday.

Saudi Arabia also pulled all Qatari troops from the coalition fighting the ongoing war in Yemen.

Qatar's foreign ministry said it regretted the measures by its fellow Arab nations, calling the decisions "unjustified".

"The measures are unjustified and are based on claims and allegations that have no basis in fact," the ministry said.

"The aim is clear, and it is to impose guardianship on the state. This by itself is a violation of its [Qatar's] sovereignty as a state," it said, adding that it is committed to the Charter of the Gulf Cooperation Council.

Last month Saudi Arabia and the UAE blocked the Qatari websites, which include the al-Jazeera news network, after reports emerged from Qatar's state run news agency of Qatari emir Sheikh Tamim bin Hamad al-Thani criticising Donald Trump, praising Iran and threatening to withdraw ambassadors from a range of Middle Eastern countries including Saudi Arabia.

Qatar protested that it was the victim of a sophisticated propaganda assault or cyber attack.

US connection

Speaking from a state visit in Australia on Monday, US Secretary of State Rex Tillerson said it was important that the GCC "remain united" and said he "would encourage the parties to sit down together and address these differences".

Tillerson said despite the spat, he did not expect it to have "any significant impact, if any impact at all, on the unified fight against terrorism in the region or globally".

Further stirring the pot, Wikileaks released an email from Hillary Clinton to John Podesta that revealed the former Secretary of State knew about both Saudi and Qatari governments providing "clandestine financial and logistical support" for Islamic State and other radical groups by August 2014.

Brent crude prices were initially helped by the news of the political crisis but by midday were down slightly at just under $50.