Qatar will withdraw from Opec on January 1

Qatar will withdraw from Opec on January 1, Qatari Energy Minister Saad Al Kaabi announced on Monday.

The state petroleum agency that reported the news said that the body had been informed of the move.

The decision to withdraw was because of Qatar's plans to increase production, the minister said.

"This decision reflects the desire of the State of Qatar to focus its efforts on the development of the natural gas industry and to implement recently announced plans to increase the country's production of liquefied natural gas from 77 to 110 million tonnes annually", Mr Al Kaabi said.

The announcement comes days before the Opec summit in Vienna. Although there has been no agreement on cuts, the fact that Russia and Saudi Arabia agreed to extend their deal to manage the oil market into 2019 led to a 4 per cent increase in the price of oil on the London and New York stock exchanges, as markets took the move as a sign that further production cuts would be agreed in Vienna.

“The nature of the animal as far as Opec is concerned is the bigger production capacity you have then the more weight you carry,” Vandana Hari, founder and chief executive of Vanda Insights, told The National. “If you aren’t on board with a tough decision like to reduce, and Qatar was never in that position since it is a relatively small producer”, she said, then you have no sway.

Now Qatar will be able to produce at whatever level it wants, she said, “but I wouldn’t see it as a threat to Opec’s efforts to cut their production because [Qatar] is not capable on its own of flooding the market”.

Mr Al Kaabi said Qatar's decision to withdraw from Opec is not related to the boycott, referring to actions by Saudi Arabia, Bahrain and the UAE to cut relations with Qatar, accusing it of seeking closer ties with Iran and supporting extremism in the region, which has been in place since last year.

“Basically, Qataris have brought the biggest weapon out and it only means more instability between the Qatari and Saudi relationship,” Naeem Aslam, chief market analyst at ThinkMarkets, told The National.

“For now, there is optimism that Saudi Arabia and Russia are committed to keep the supply under control. This has jolted the price of oil higher especially the fact that Canada's largest oil-producing province is curbing the output.”

Covering an area of around 12 thousand square kilometres and with a population of almost 2.7 million, Qatar is the smallest Opec member country in terms of both area and population.

Source: https://www.thenational.ae/business/energy/qatar-will-withdraw-from-opec-on-january-1-1.798518