- Qatar’s withdrawal has been spurred by its ongoing dispute with Saudi Arabia and its allies.
Qatar’s surprise decision to pull out of Opec is unlikely to have any major impact on global energy markets but is largely symbolic as the Gulf state is an insignificant member of the group, oil experts and analysts said.
Qatar, one of the smallest oil producers of the oil exporters’ group but the world’s biggest liquefied natural gas exporter, said on Monday it was quitting Opec from January to focus on its gas ambitions.
Ehsan Khoman, head of Mena research and strategy at Japanese bank MUFG, said that Qatar’s exit is largely symbolic as it is a negligible member of the group.
“More importantly is the timing of Qatar’s withdrawal – just three days before Opec meets in Vienna to finalise the production cuts. This suggests that Qatar may have an agenda to raise production while others in Opec are curbing production, although Qatar’s oil output has been very steady in recent years with limited prospects of increases given maturing fields,” said Khoman.
Algeria’s former energy minister and Opec chairman, Chakib Khelil, said the withdrawal could signal a historic turning point of the organisation towards Russia, Saudi Arabia and the United States.
Analysts at Capital Economics said although Qatar has been a member of Opec since 1961, it is doubtful that it would have a major bearing on global energy markets.
“While Qatar is the world’s largest LNG producer, it is a small player in the oil market – it produces just 600,000bpd, making it the fifth-smallest Opec member. And in any case, Qatar will still comply with output deals between major oil producers,” analysts pointed out.
They said more than anything, Qatar’s withdrawal has been spurred by its ongoing dispute with Saudi Arabia and its allies.
“Recall that in June 2017, Saudi Arabia and the rest of the Anti-Terror Quartet severed all diplomatic and transport (air, sea and land) ties with Qatar over its links with Iran and alleged support for terrorist organisations.”
Amrita Sen, chief oil analyst at consultancy Energy Aspects, said Qatar’s withdrawal “doesn’t affect Opec’s ability to influence as Qatar was a very small player”.
“We view that the expected announcement of an Opec+ cut this week to extend the rally started today and push Brent oil prices likely above the mid-$60-per-barrel level. Given the likely cautious wording of the agreement with a focus on stabilising inventories – the focus of attention will thus be on any evidence of a decline in exports as well as an end to the larger than seasonal inventory builds that will bring Brent prices back slightly above $70 per barrel in January 2019,” said Khoman.
Qatar, which is embroiled in a protracted diplomatic row with Saudi Arabia and some other Arab countries, said its decision was not driven by politics. “We are not saying we are going to get out of the oil business but it is controlled by an organisation managed by a country,” Qatar’s Energy Minister, Saad Al Kaabi told a news conference.
He said Doha would focus on its gas potential because it was not practical for Qatar 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.