An international affairs analyst believes Saudi Arabia's move to try to isolate Qatar diplomatically is part of the Saudis' proxy war with Iran.

James Dorsey, senior fellow at the S. Rajaratnam School of International Studies, said that by orchestrating the move by Egypt, the United Arab Emirates and Bahrain to also severe their ties with Qatar, the Saudis stepped up their 40-year-old rivalry with Iran.

Saudi Arabia, which is predominantly Sunni, has been accusing Iran, which is predominantly Shiite, of sponsoring terrorist groups. The Saudis have also accused Qatar of supporting terrorists.

Dorsey said the Saudis' attempt to isolate Qatar has three goals: to compel Gulf states to take a side; to compel Muslim nations to take a side as well; and, to pressure the United States to go down hard on Qatar.

He said the situation in the Gulf is complicated by the fact that Qatar hosts the largest U.S. military base in the Middle East.

Dorsey said it is still too early to tell if Saudi Arabia's actions will have a significant impact on migrant workers in the region.

But Dorsey said oil prices will be affected as the diplomatic row creates uncertainty in the Gulf region.

World oil prices jumped following Saudi Arabia's announcement that it cut ties with Qatar.