Saudi Arabia, Bahrain, the United Arab Emirates and Egypt say they will be cutting off most of their diplomatic and economic ties to Qatar after accusing the country of supporting terrorism.
Qatar is one of the world's richest countries, being the largest producer of liquefied natural gas.
Oil gained and Qatari stocks have dropped after the announcement and the country calls the pull out "baseless" and was part of a plan to "impose guardianship on the state, which in itself is a violation of sovereignty."
This Saudi-led alliance is working to stop any opposition standing in their way to fight against the Shiite-ruled Iran.
Chief executive officer of Nomura Asset Management Middle East, Tarek Fadlallah says the cut off can have far-reaching effects beyond Qatar.
“There are going to be implications for people, for travelers, for business people. More than that, it brings the geopolitical risks into perspective. Since this is an unprecedented move, it is very difficult to see how it plays out.”
Control Risks in Dubai analyst Allison Wood says it's not in the United States best interest to see the Gulf Cooperation Council unravel.
"That would be very destabilizing in a region that’s already very unstable. There are limits to the U.S. giving tacit approval to the kind of pressures that are being applied.”
The five key countries involved in the cut are U.S. allies, and Qatar has committed $35 billion to invest in American assets.