Oman: Qatar's Withdrawal From OPEC May Lead To Retaliation

Randal Sanchez
December 4, 2018

However, the current state of affairs won't make the country's position worse, as Qatar is "isolated anyway".

Although contributing only a fraction of OPEC's overall production, Qatar's decision also throws into question the viability of the cartel.

The surprising move by Qatar may spur country's like Nigeria, ninth largest exporter, to value their gas more and define a set of finance terms aimed at getting extra value from the natural resource.

Qatar has been a member of OPEC since 1961 but has been the target of a Saudi-led political and economic boycott since June 2017.

Qatar has oil output of only 600,000 barrels per day (bpd), compared with the 11 million bpd produced by Saudi Arabia, the group's biggest oil producer and world's biggest exporter.

OPEC and its allies, including Russian Federation, are expected to agree on a supply cut at this week's meeting in a bid to support crude prices that have slid nearly 30 per cent since October.

Walking away from OPEC's production controls could mean Qatar may increase output after leaving the group, undermining efforts to support prices.

Qatar's exit coincides with pressure on Riyadh and specifically Crown Prince Mohammed bin Salman over the killing of Saudi journalist Jamal Khashoggi.

OPEC members are meeting to agree on production cuts, which can help shore up the price of oil.

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He said, Qatar has plans to increase its annual exports of liquified natural gas, LPG from 77 million tons of gas per year to 110 million tons.

"I would like to reaffirm Qatar's pride in its worldwide standing at the forefront of the natural gas producers, and the biggest LNG producer in the world, as the cleanest fossil fuel known to mankind", he said.

Meanwhile, Robin Mills, CEO of Qamar Energy, a consultancy firm based in Dubai, told CNN, "Qatar is a fairly small producer.It was not making very much, so it's not that significant in itself".

It marks the first time a Mideast nation has left the cartel since its founding in 1960.

Benchmark Brent crude for instance reached over $85 USA a barrel in early October, only to drop sharply in the time since.

"Quitting OPEC is largely symbolic for Qatar", he told Bloomberg. Other members include Algeria, Angola, Congo, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates and Venezuela.

Crude oil has not been included in the list of products facing import tariffs, but traders said the positive sentiment was supporting crude markets.

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

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