By Henning Gloystein
SINGAPORE (Reuters) - Oil markets rose more than 1 percent on Monday, pushed up by tensions in the Middle East where top crude exporter Saudi Arabia and other Arab states cut off ties with Qatar, and as signs of falling OPEC supplies tightened the market.
Saudi Arabia as well as the United Arab Emirates, Egypt, and Bahrain cut ties with top liquefied natural gas (LNG) and condensate shipper Qatar on Monday, accusing it of supporting extremism and undermining regional stability.
"There is not much geopolitical risk premium priced into oil right now, (but) if tensions do ratchet higher between the key OPEC producers, like Saudi Arabia, Iran and Iraq, then the market will start paying attention to this," said Virendra Chauhan, an oil analyst at consultants Energy Aspects.
With a production capacity of about 600,000 barrels per day, Qatar's crude oil output, one of OPEC's smallest, is dwarfed by the near 10 million bpd churned out by the cartels de facto leader, Saudi Arabia.
Brent crude oil futures had risen 55 cents, or 1.1 percent, to $50.50 per barrel by 0647 GMT.
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U.S. West Texas Intermediate futures were at $48.19 a barrel, up 53 cents, or 1.11 percent.
Chauhan also said that the oil markets were "disconnected from fundamentals" over the past week and have ignored recent "constructive data" that pointed to falling oil inventories.
Saudi Aramco raised the July official selling prices for its Arab Light grade to all major regions of Asia, Northwest Europe, and the United States on Sunday.
The price signal reflected other signs that an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to curb production by almost 1.8 million barrels per day (bpd) was starting to impact actual supplies.
Shipping data in Thomson Reuters Eikon shows that OPEC tanker supplies to customers around the world were at 24.3 million bpd in May, down from 24.8 million bpd in April and compared with an average of 25.1 million bpd in the first five months of the year.
OPEC shipped an average of 26.4 million bpd in the last three months of 2016.
Despite this, Brent futures are still down about 7 percent from their open on May 25, when OPEC announced it would extend its production cut into 2018.
That is because crude production in the United States, which is not participating in the cuts, has jumped by over 10 percent since mid-2016 to 9.34 million bpd, close to levels by top producers Saudi Arabia and Russia.
"Investors continue to doubt the ability of OPEC to rebalance the oil market, with crude oil prices remaining under pressure amid further signs of rising U.S. oil production," ANZ bank said on Monday.
The rise in U.S. production has been driven by a record 20th straight weekly climb in oil drilling for new production, with the rig count climbing by 11 in the week to June 2, to 733, the most since April 2015.
(Additional reporting by Roslan Khasawneh; Editing by Christian Schmollinger and Joseph Radford)