Walking away from OPEC’s production controls could mean Qatar may increase output after leaving the group, undermining efforts to support prices
Doha: Qatar has said it will withdraw from the Organization of the Petroleum Exporting Countries (OPEC) as of January 2019, in order to focus on gas production.
Qatar’s Energy minister Saad al-Kaabi said on Monday the decision came after Qatar reviewed ways to enhance its role internationally and plan its long-term strategy.
While announcing the decision to quit Opec, the country's energy minister Saad al-Kaabi said that it was not linked to the political and economic boycott of Qatar that has been imposed since June 2017 by Opec's de facto leader Saudi Arabia and three other Arab states, including the UAE.
Following the announcement, oil prices soared by around 5% on Monday after the United States and China agreed to a 90-day truce in their trade war, and ahead of a meeting this week by OPEC that is expected to result in a supply cut.
All members of the Organisation of the Petroleum Exporting Countries (OPEC) will be meeting on December 6, along with non-OPEC member Russia, and are expected to announce cuts aimed at reining in a production overhang that has pulled down crude prices by around a third since October.
The OPEC is a 15-nation strong organisation of countries that have rich oil reserves. The OPEC is estimated to currently account for nearly half of the global oil production and so has a major say in oil prices.
Analysts expect a reduction of 1 million-1.4 million barrels per day versus October levels, which were the highest by OPEC as a group since December 2016.
Qatar as an oil producer
> Qatar is the 11th-biggest oil producer in OPEC, pumping 610,000 barrels a day in October, less than 2 percent of the group total 33.3 million.
> Oil and natural gas account for a substantial share of the country’s gross domestic product.
> Petroleum has made Qatar one of the world’s fastest-growing and highest per-capita income countries.
> It exports around 466 barrels per day
> The country has also been at loggerheads with its much bigger neighbour and de facto OPEC leader Saudi Arabia.
Global oil prices
Walking away from OPEC’s production controls could mean Qatar may increase output after leaving the group, undermining efforts to support prices.
US West Texas Intermediate (WTI) crude futures were at $53.41 per barrel at 06.22 GMT, up $2.48 per barrel, or 4.9% from their last close.
US crude prices were further pushed up by an announcement from Canada that Alberta province will 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. Most of Alberta’s oil is exported to the United States.
"Exiting OPEC will not affect the organization," Al-Kaabi said, adding he sees the price of oil between $70 and $80 a barrel.
India and Qatar ties
In 2017-18, India’s crude oil import in value terms has gone up by 25% to $80 billion.
Though the share of OPEC countries in India’s crude imports dipped to 82.6% in the same period as compared to 87.3% in the corresponding period previous fiscal (2016-17) as import volumes rose from non-OPEC nation’s including Mexico, Brazil, US, Canada, Russia, Kazakhstan, and Sudan.
India imports a major portion of liquefied natural gas (LNG) from Qatar, According to ministry figures, of the total LNG import in 2017-18, 46% came from Qatar, 9.17% from Australia, 8.41% from France and 7.82% from Nigeria. Netherlands, USA, Malaysia, Norway, Oman, Angola and 3.72% from Equatorial Guinea.
(WIth agency inputs)
Last Updated 2:07 PM IST