While an agreement between the OPEC and N-OPEC countries last month to extend the current supply cut for another nine months until March 2018 aimed to reduce global oil supply by 1.76 million barrels failed to boost oil price, the recent diplomatic rift that broke out in the Middle East between traditional partners is pushing crude price higher on Monday. North American benchmark WTI crude is currently trading at $48.2 per barrel, up 1.2 percent for the day so far and Brent is currently trading at $2.2 per barrel premium to WTI.

The crisis in the Middle East was triggered by a hacking scandal on 23rd May, when Qatar news agency’s website and social media accounts were apparently hacked, spreading what Doha calls false statements citing Qatari Emir Sheikh Tamim bin Hamad Al Thani. Those included him allegedly slamming the recent tensions with Iran, calling Hamas and Hezbollah resistance movements, as well as doubting whether US President Donald Trump will stay in power for long. The agency’s compromised Twitter account also cited the Qatari foreign minister as saying the island kingdom was severing relations with some of its neighbors. While Doha vehemently denied the validity of those claims, UAE-based broadcasters Al-Arabiya and Sky News Arabia picked up the stories, giving them extensive coverage and infuriating Qatari officials.

Earlier today, Saudi Arabia, United Arab Emirates, Egypt and Bahrain announced that they are severing diplomatic ties with Qatar in response to the latter’s support for extreme ideas, terrorist organizations and meddling in other countries’’ affairs. Qatar will not be allowed to use airports or naval ports of the above countries. Qatari stocks have slipped more than 6 percent over the diplomatic rift on Monday.

We at FxWirePro suspect that despite the support from this diplomatic rift, the bearish outlook is oil in unlikely to change. As of now, $49 per barrel and $50 per barrel area remain a major resistance for the bulls.