Qexit: Qatar’s pullout from OPEC could see deeper diplomatic ramifications in the region’
Doha, Dec 3: Qatar has announced its plans to pull out of the Organization of the Petroleum Exporting Countries (OPEC) on Monday, December 3, and it did so just days ahead of a crucial meeting between the oil-producing groups' body and its allies in Vienna, Austria, on December 6.
Qatar's Energy Minister Saad al-Kaabi said in a press conference that his country will withdraw from the OPEC on January 1, 2019, ending a relationship which started in 1961.
Qatar has said the decision had nothing to do with (geo)politics but "technical and strategic" interests. The country is one of the smallest oil producers of OPEC compared to spearhead like Saudi Arabia but is one of the world's largest producers of LNG (Liquefied Natural Gas).
The question whether Qatar was doing for political reasons came up since it was subjected to diplomatic restrictions by Saudi Arabia and some other countries in the region in June last year. In the last 18 months, Saudi and three other Arab countries cut trade and transport links with the tiny Middle Eastern nation, after accusing it of supporting terrorism and the regional rival Iran. Qatar hit back saying the allegations were baseless.
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Doha's withdrawal from the OPEC is unlikely to have a big impact on the aspect of oil production since it is one of the smallest producers in the group. "The decision by Qatar to withdraw from OPEC does come as a surprise, but is unlikely to have a significant impact on the oil market," Peter Kiernan, lead energy analyst at the Economist Intelligence Unit, told CNBC. Qatar produces around 600,000 barrels of oil a day which is much smaller than its neighbours.
Other countries may follow suit?
But Qatar's decision could have significance elsewhere. Since the geopolitical tussle that started last year is still far from over, Qatar's step could also encourage other members of the OPEC to take similar steps and have their own trading norms by giving up the membership. Such an eventuality will certainly have an impact on the oil cartel and growing diplomatic tension in the area which is far from a peaceful one.