Egypt, Saudi Arabia, United Arab Emirates and Bahrain today cut relations with Qatar, which is an ally of Washington and is home to a US military base.
Saudi Arabia accused Qatar of supporting militants and destabilising the region. But Qatar denounced the move as based on lies.
Iran, which is Saudi Arabia’s regional arch-rival, blamed the diplomatic crisis on Donald Trump’s hawkish tone during a visit to Riyadh last month.
Hamid Aboutalebi, deputy chief of staff of Iran's President Hassan Rouhani, made reference to Mr Trump’s traditional sword dance with the Saudi king.
"What is happening is the preliminary result of the sword dance,” he tweeted after the countries halted all land, sea and air traffic with Qatar.
He said that the “era of cutting diplomatic ties is over” and called for regional dialogue to resolve the crisis.
Saudi state news agency SPA accused Qatar of supporting what it described as Iranian-backed militants in its Shi'ite Muslim-populated Eastern region of Qatif and in Bahrain.
Qatar has also been expelled from Saudi-led Arab coalition fighting the he Iranian-backed Houthi group in Yemen.
In Syria Qatar supports rebel groups that are fighting the Assad regime, which is supported by Iran.
Donald Trump takes part in a sword dance during a visit to Riyadh
Iranian Foreign Minister Javad Zarif tweeted: "Neighbours are permanent; geography can't be changed. Coercion is never the solution. Dialogue is imperative, especially during blessed Ramadan."
US Secretary of State Rex Tillerson told Washington has encouraged its Gulf allies to resolve their differences. But Mr Trump’s recent visit may have emboldened the Gulf allies.
Jean-Marc Rickli, from the Geneva Centre for Security Policy, told Reuters: “You have a shift in the balance of power in the Gulf now because of the new presidency: Trump is strongly opposed to political Islam and Iran
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"He is totally aligned with Abu Dhabi and Riyadh, who also want no compromise with either Iran or the political Islam promoted by the Muslim Brotherhood."
The cutting of ties mark the renewal of a four-year effort to isolate Qatar. Egypt and the Gulf Arab states have long resented Qatar's support for Islamists, especially the Muslim Brotherhood.
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Yemen, Libya's eastern-based government and the Maldives have also followed suit and cut off diplomatic ties with Qatar.