The governments of Saudi Arabia, Bahrain, UAE, Yemen and Egypt announced this morning that they were severing diplomatic ties with Qatar over allegations that the latter is pursuing policies that are destabilising the region, including support for regional jihadist groups and for Iran.
The tiny island nation of Bahrain blamed Qatar's "media incitement, support for armed terrorist activities and funding linked to Iranian groups to carry out sabotage and spreading chaos in Bahrain" for its decision.
The five countries have since closed off their air, land and sea contact with the peninsula.
Dubai-based carrier flydubai also suspended flights to and from Doha from Tuesday after the United Arab Emirates severed ties with Qatar.
The sentiment against Qatar was shared by Egyptian business tycoon Naguib Sawiris, who called on Egyptian businessmen to withdraw their investments from Qatar and halt business dealings with the Gulf state, his spokesperson said on Monday.
Qatar said the decisions would "not affect the normal lives of citizens and residents".
Qatar Airways faces disaster as the owner, the Qatari Government has been labeled a terrorist by it's neighboring Arab countries.
The Dubai-based airline Emirates said it is suspending flights starting Tuesday to Qatar amid a "growing diplomatic rift".
Oil prices fell about 1 percent on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production.
The small Arab country of Qatar, bordered only by Saudi Arabia and the Persian Gulf, has always been accused of allowing terror financiers to operate within its borders.
It took a major gamble on the Muslim Brotherhood, supporting its brief stint in power in Egypt as well as the group's Islamist offshoots in the region, including Hamas, which rules the Gaza Strip. Saudi Arabian Airlines also stopped its flights to Qatar.
The Saudi-led coalition inYemen, Egypt, Maldives, one of Libya's three governments and the United Arab Emirates have joined Saudi Arabia and Bahrain in cutting ties with Qatar, adding fuel to a diplomatic dispute in the Gulf region.
Two Middle East trade sources pointed to thousands of trucks, carrying food supplies, stuck at the border with Saudi Arabia which were unable to cross over into Qatar.
Saudi Arabia is also shutting its border to neighboring Qatar, locking the state out of its only over-land border crossing.
It said: "We have no further comments for the time being".
Last month, the Qatari news agency quoted Emir Tamim bin Hamad Al Thani as saying that Iran is "a regional, Islamic power that can not be ignored" and it would not be wise to fight against it.
But Qatar's foreign ministry insisted there was "no legitimate justification" for the decision, and said it was a "violation of its sovereignty".
The crisis is the worst to hit Gulf Arab nations since the creation in 1981 of the Gulf Cooperation Council (GCC) grouping Saudi Arabia, Bahrain, the UAE, Kuwait, Oman and Qatar.
Speaking in Sydney, US Secretary of State Rex Tillerson said he did not expect the announcement to have "any significant impact... on the unified fight against terrorism".
USA officials have also become increasingly vocal in criticizing Qatar - which hosts the US's regional military headquarters - expressing deep concern about allegations that it finances Islamist extremist groups in Syria.
Analysts say President Donald Trump's recent visit to Saudi Arabia emboldened hawkish Saudi royals by positioning America squarely with Sunni Arab countries against Iran.