Qatar has announced that is withdrawing from OPEC in January, ending a near-six decade long membership of the oil price cartel. The emirates' oil minister, Saad Sherida Al-Kaabi, told reporters today that Doha had made the decision in order to focus on its gas industry and dismissed speculations that the withdrawal was connected to politics.
The tiny Gulf state, which is the world's largest exporter of liquefied natural gas (LNG), giving its citizens the highest per capita income of any country, has been subjected to a boycott by its Arab neighbours since summer 2017. Saudi Arabia with the support of the UAE, Egypt and Bahrain imposed a trade and travel embargo, accusing Qatar of financing terrorism and interfering in the internal affairs of other states.
Qatar is among the smallest oil producers in the group, pumping 609,000 barrels a day – two per cent of OPEC's total — compared with more than ten million barrels produced by Saudi Arabia or the three million produced by the United Arab Emirates.
While its oil production is one of the lowest, Qatar is said to have an influential role within the 15 member organisation. Since its membership in 1961, Doha is said to have played an important mediating role amongst larger oil rivals and helped broker a production-cutting deal between OPEC, Russia and other producers in 2016 that helped lift prices from their lows at the time.
The decision to withdraw from OPEC has come as a surprise. Analysts in the New York Times said that there was little apparent reason for Qatar's natural gas activities to conflict with its membership in OPEC. The country has spent decades building its natural gas industry while belonging to the group. It has developed its resources in partnership with major oil companies including Exxon Mobil and Royal Dutch Shell.
It was also pointed out that in focusing on natural gas, Qatar is betting on the vast resources it controls in the waters that surround it. Consumption of liquefied natural gas, which is chilled to liquid form and transported on special ships, is growing faster than that of natural gas or oil.
Another factor that may have played a part in Qatar's decision is said to be the growing influence of Russia in the oil market. Moscow has become more influential in setting oil policy alongside Saudi Arabia, which is the largest producer within the cartel, and its de facto leader. The two oil super powers have largely been dictating terms with regard to production in recent years, which analysts say has irritated other OPEC members, especially Iran.
Experts in the global oil market described Qatar's decision to walk away as being inconsequential given Doha's limited oil output but expressed their surprising. "It would be better to be there [OPEC] than not," said Robin Mills, chief executive of Qamar Energy, a consultancy, according to the Financial Times. Speculating on the sudden decision Mills continued: "Presumably it is linked to the political dispute, but lots of OPEC members are not party to the dispute."
OPEC membership was not preventing Qatar from focusing on ramping up LNG production, Mills added.