- Qatar says it will quit the OPEC cartel of oil producers on January 1 after 57 years of membership.
- It announced the decision at a press conference Monday, just days ahead of a crucial meeting on Thursday.
- Oil prices have recovered in recent days after Russia and Saudi Arabia agreed to supply cuts.
Qatar, OPEC’s 11th-largest oil member by production, shocked market watchers on Monday with the announcement it would quit OPEC, adding additional bite to proceedings ahead of a meeting scheduled for Thursday in Vienna.
While Qatar has attributed the decision, effective January 1, to its plans to increase natural-gas production, it’s clear that its diplomatic spat with Saudi Arabia isn’t abating.
The cartel’s largest member, Saudi Arabia, along with three other countries, has cut trade and transport ties with Qatar for the past 18 months, accusing Qatar of supporting terrorism and the Saudis’ largest regional rival, Iran. Qatar has said the boycott is damaging for its national sovereignty and has denied the claims.
After a 30% drop since October, crude prices had a respite with 5% surge Monday following positive news that Russia and Saudi Arabia had agreed to cut production and that the US and China had reached a 90-day trade-war truce. Brent crude was trading at $US61.62, up 3.6% as of 9:30 a.m. in London (4:30 a.m. EST), while West Texas Intermediate was up 4.1% at $US53.06.
“For me to put efforts and resources and time in an organisation that we are a very small player in and I don’t have a say in what happens … practically it does not work, so for us it’s better to focus on our big growth potential,” Qatar’s energy minister, Saad al-Kaabi, told a news conference Monday, as reported by Reuters.
Qatar was the first country to join OPEC’s five founding members 57 years ago. It is, through Qatargas, the world’s largest producer of liquefied natural gas. The tiny Gulf state exports over 77 million tonnes of liquefied natural gas annually, good for about 30% of global market share.
“Qatar’s decision to exit OPEC over political disagreements with allies could sour some of the bullish sentiment, though Qatar is one of the smaller Gulf oil producers,” said Mike van Dulken and Artjom Hatsaturjants of Accendo Markets.
Al-Kaabi said Qatar Petroleum planned to raise its production capability to 6.5 million barrels barrels of oil equivalent a day from 4.8 million in the next decade.
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