Qatar is to pull out of Opec after nearly 60 years of membership of the oil cartel, but will attend a meeting this week that will discuss cutting output.
Saad al-Kaabi, the country’s energy minister, told a news conference: “Qatar has decided to withdraw its membership from Opec effective January 2019 and this decision was communicated to Opec this morning.”
He said the decision was not linked to a political and economic boycott of Qatar imposed in June 2017 by Saudi Arabia, Opec’s largest member and its de facto leader, and three other Arab states – the United Arab Emirates, Bahrain and Egypt. They imposed a trade and travel embargo on Qatar over allegations that it supports terrorism.
Qatari is one of the cartel’s smallest oil producers, but is the world’s largest exporter of liquefied natural gas. Al-Kaabi said the gulf state had reviewed ways to enhance its role internationally, including focusing on its gas industry. Qatar wants to ramp up liquefied natural gas production from 77m to 110m tonnes a year.
He added that Qatar would still attend the Opec meeting in Vienna that starts on Thursday and will set oil policy for next year.
Opec members are widely expected to cut production, after seeing oil price tumble this autumn. Brent crude oil prices slid to below $60 a barrel last week while US crude fell below $50 a barrel. Oil prices surged on Monday after the US and China agreed a 90-day truce in their trade war at a weekend meeting of the G20 nations in Argentina.
The price of Brent crude jumped 4.7% to $62.24 in early trading, while US crude was also up about 5%. BP’s share price rose 4% and Shell was up 3.5%. Mining stocks are also surging.
Qatar’s energy minister said the decision to withdraw had not been not easy after 57 years of Opec membership, but noted that the country’s impact on the cartel’s production decisions was small. He stressed that Doha would abide by its global commitments like any other non-Opec oil producer.
The withdrawal comes as other non-Opec countries such as Russia have gained more clout alongside Saudi Arabia in setting oil policy.
Naeem Aslam, an analyst at online broker ThinkMarkets, said: “Qatar leaving Opec isn’t great news for the oil market and the market participants haven’t digested the full impact of this news. Basically, Qataris have brought the biggest weapon out and it only means more instability between the Qatari and Saudi relationship.
“In fact, we would not be surprised if other counties start to follow the same path and then we have no control over supply or demand as each individual country could just do what they like. Yes, 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.”