- 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 on the back of a agreed Russian and Saudi supply cuts.
Qatar, OPEC’s 11th largest oil member by production, shocked market watchers with the announcement it will quit OPEC, adding additional bite to proceedings ahead of a December 6 meeting in Vienna.
While Qatar has stated the decision, effective January 1, is thanks to its plans to increase natural gas production, it’s clear its diplomatic spat with Saudi Arabia isn’t abating.
OPEC largest member – Saudi Arabia – has cut trade and transport ties with Qatar for the past 18 months, alongside three other countries, accusing the country of supporting terrorism and their 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 on Monday following positive news that Russia and Saudi Arabia agreed to cut production and shored up by news of a 90-day trade war truce between the US and China. Brent crude was trading at $61.62, up 3.6% as of 9.30 a.m in London (4.30 a.m EST) while WTI is up 4.1% at $53.06.
“For me to put efforts and resources and time in an organization 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 57 years ago following the group’s formation by five original members. It is, through Qatargas, the world’s largest liquefied natural gas producer in the world. The tiny gulf state exports over 77 million tonnes of LNG annually, more than Malaysia and Australia combined, with 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 from 4.8 million barrels oil equivalent per day to 6.5 million barrels in the next decade.