Gulf crisis threatens India on three fronts — oil, trade and defence

With the Gulf banning air travel to Qatar, travelling for Indians has become dicey. Outbound flights from Qatar are affected by this crisis. However, inbound flights from India are not affected as of now.

Indians who want to fly to other Gulf countries from Doha for work or for other reasons will be unable to do so. Indians who want to travel to Qatar can do so. Jet Airways and Indigo confirmed their Doha flights to be as per schedule, but can get costlier.

Trade relations with Qatar

India imports USD 7.63 billion worth of commodities, mainly LNG and oil, from Qatar. Even though Indian exports to Qatar have increased, India is still dependent on Qatar for its LNG supply.

The imports to Qatar are worth USD 787.47 million, still lower than India's import bill. The shipment of the supplies can be affected because of the ban.

Although bilateral trade (trade between two parties) is unlikely to be hit, the ongoing diplomacy crisis can affect India's trade relations with Qatar.

Shaky Oil Prices 

India is the third largest consumer of oil. With the Gulf-led OPEC output cuts to stabilise the oil prices and now with the ongoing diplomacy crisis, the oil prices can be affected.

However, as of now, the oil prices are persisting between the USD 46 and USD 49 range. This price range is against OPEC's aim to stabilise prices between USD 50 and USD 53.

The prices can however shoot up due to this crisis as well. The hike in the oil prices can hurt the Indian economy.

Military relations with Qatar

Recently, Modi met with Qatar's emir strengthened not only their economic relations but also their defence relations. India and Qatar agreed to boost these relations together and to enhance the three base army training - naval, air and land (including coastal defence). The two nations also agreed to jointly produce weapons to strengthen their relations.

Considering the above ties and the reason to Gulf rift, there's a chance that India could also be under watch and/or be blamed for "supporting terrorism."

The conflict 

The GCC isolated Qatar. Seven countries — Saudi Arabia, United Arab Emirates (UAE), Bahrain, Yemen, Egypt, Maldives and Libya — have cut diplomatic relations with Qatar.

The countries believe that Qatar supports terrorism and its relations with Iran, Saudi Arabia's rival. Hence, the countries have banned air, sea and land travel to Qatar's capital, Doha. The Gulf States have given Qatari visitors and residents a two week notice to leave.

Among the 7 - UAE, Saudi Arabia, Bahrain and Yemen - are a part of the GCC. Although the other three countries are not a part of the GCC, they cut ties for the same reason.

Qatar is blamed to be connected to the Islamic-militant group "Muslim Brotherhood," which originates from Egypt. Not only in relations with Muslim Brotherhood, but other militant groups including Al-Qaeda and ISIS and is also blamed to financially support the Palestinian Islamist militant group, Hamas.

However, Qatar is the economic generator of the GCC. Qatar is the largest exporter of Liquefied Natural Gas (LNG). With LNG, petroleum too makes 70% of Qatar's revenue. The nation's GDP major share comes from these exports.

The Qatar and GCC disputes have been going on since 1991.  In 2014, UAE, Bahrain and Saudi Arabia suspended ties with Qatar for supporting Muslim Brotherhood. In 8 months, the suspension was lifted after the Gulf countries decided to return their ambassadors to Doha.