Qatar – OPEC Pullout
Qatar citizens have the highest per capita income of any country thanks to its status as the world’s largest exporter of liquefied natural gas, but the country’s decision to end its nearly 60-year-old membership in the Organization of the Petroleum Exporting Countries (OPEC) caught many observers by surprise earlier this week.
The tiny, wealthy Persian Gulf country always wanted freedom from an oil cartel dominated by Saudi Arabia, one of its regional rivals. "The withdrawal decision reflects Qatar's desire to focus its efforts on plans to develop and increase its natural gas production," Saad Sherida Al-Kaabi, the country's newly-appointed minister of state for energy affairs, was cited as saying in one of the tweets.
The move comes amid a deteriorating political situation between Qatar and its neighbors. Four Arab states – Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt – have imposed a trade and travel embargo on the country The Arab quartet has made clear that relations with Qatar can be normalized only if the country curbs its destabilizing influence in the region. By pulling out of OPEC at this moment, Qatar has once again shown its truculence and provided yet another blow to unity for the region.
At 600,000 barrels a day, Qatar’s oil output is about 2 percent of OPEC’s total — compared with more than 10 million barrels produced by Saudi Arabia or the three million produced by the United Arab Emirates. The minister commented that “Qatar was unwilling 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.”
As one of the smallest producers in the OPEC, Qatar’s modest contributions to the oil market will most likely dampen the effect of its move on prices, which have been battered in recent weeks by fears of a glut. Prices surged on Monday after it emerged at the Group of 20 meeting over the weekend that Russia and Saudi Arabia would continue to cooperate on managing the market.
Nevertheless, Qatar’s defection could raise questions about OPEC’s ability to enforce future production cuts as the cracks are growing within OPEC amid Saudi Arabia’s decision to forge both increased geopolitical and energy relations with Russia. "It's a disappointment for OPEC because they've been trying to attract members," said Robin Mills, CEO of Qamar Energy, a consultancy firm based in Dubai.
Besides, OPEC has no role in the global market for natural gas. Also, Qatar did not refer the dispute with other Gulf states in its announcement, emphasizing plans to cement its position as the world's leading supplier of gas. Its exports currently account for about 30% of global demand.