Qatar Decision to Quit OPEC Surprises

Qatar Decision to Quit OPEC Surprises

Qatar Decision to Quit OPEC Surprises

On Monday, Qatar announced its intention to pull out of OPEC (Organization of the Petroleum Exporting Countries).

Qatar said its decision was not driven by politics but in an apparent swipe at Riyadh, Minister of State for Energy Affairs Saad al-Kaabi said: "We are not saying we are going to get out of the oil business but it is controlled by an organization managed by a country". "Our potential is gas", said Kaabi.

The analyst stressed that the tiny gas-rich state of Qatar accounts for a minuscule share of the total oil output by the OPEC countries.

Qatar produces only 600,000 barrels per day (bpd), compared with the 11 million bpd produced by Saudi Arabia, the group's biggest exporter.

OPEC members, Saudi Arabia and the United Arab Emirates, and fellow Arab states Bahrain and Egypt, have imposed a political and economic boycott on Qatar since June 2017.

Kaabi announced the break with OPEC just weeks after he was appointed to the energy minister post.

OPEC is expected to limit oil production when it meets later this week.

As Qatar's announcement to exit OPEC stirred up a storm in global energy market, Doha-based energy experts and audit firms held urgent internal meetings to take stock of the situation.

With daily oil production of around 600,000 to 700,000 barrels and a larger natural liquefied gas profile, Qatar has chose to exit the Organisation of Petroleum Exporting Countries (OPEC) in 2019, to leverage on growing its LNG portfolio.

Its biggest contributor, Saudi Arabia, now extracts 11 million per day.

It took years for engineers to discover the field's vast reserves, which shot Qatar to No. 3 in world rankings, behind Russian Federation and Iran, with which it shares the North Field.

The Cantor Fitzgerald Europe representative revealed that her company doesn't think Qatar's decision to leave "makes much of a difference to the ability of OPEC to influence global supply and ergo prices".

International Brent crude oil futures were up $2.89 per barrel, or 4.9 per cent, at $62.35 a barrel.

A Saudi-led coalition implemented a blockade on Qatar in June past year, severing diplomatic, trade and transport links based on accusations that stemmed from its funding of extremist groups and relations with Iran. In particular, they say specs were driving up the price of oil ahead of Iran sanctions and covered afterwards.

Oil also received support from an announcement by the Canadian province of Alberta that it would force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage.

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