Oil in Global Economy Series: Qatar to face retaliation over decision to quit OPEC

Qatari energy minister surprised markets participants, as well as OPEC (Organization of Petroleum Exporting Countries) members by abruptly announcing yesterday in a press conference in Doha that in the coming January, Qatar would no longer be part of the OPEC cartel. The announcement came just days before OPEC members are set to gather in Vienna to discuss oil production cuts.

Qatar, which joined the organization back in 1961, announced that its decision is based on the country’s long-term strategy and as it has a diminished potential in petroleum exports. Instead, Qatar would focus more on natural gas, which is considered to be having a much greater potential. Qatar currently produces around 0.6 million barrels of oil per day.

Qatar is one of the world’s leading gas exporter and has been feeling increasingly isolated in a group that is largely dominated by oil-rich Saudi Arabia, which since the summer of 2017 has led an economic and diplomatic blockade of Qatar over its alleged involvement in terrorist activity in the region and over its closer ties to Iran. Saudi And United Arab Emirates led group demanded that Qatar cut off its connection with Iran, with which it shares large natural gas field and production.

The country is likely to face retaliation over its decision at the coming meeting, which will be attended by the Qatari energy minister Mohammed Saleh Al Sada, as it might encourage some other members to follow suit. Oman’s oil minister expressed his dismay and surprise at Qatar’s decision during an interview and confirmed that Qatar is likely to face retaliation over its decision as it is leading to create a gas producers’ cartel while abandoning OPEC. He also expressed fear that some other countries like the UAE and Algeria could follow Qatar out of the cartel.