Qatar Decision to Quit OPEC Surprises
Qatar’s decision to leave OPEC has been described as a “surprise” by Ashley Kelty, an oil and gas research analyst at Cantor Fitzgerald Europe.
“The decision by Qatar to quit OPEC is certainly a surprise, although it is more the timing of the announcement rather than the actual impact on OPEC supply that bears significance,” Kelty said in a statement sent to Rigzone.
“Qatar is a tiny oil producer – accounting for less than two percent of the cartel’s output – but it is one of the world’s largest LNG producers and as such membership of OPEC doesn’t really deliver the benefits that it does to other member nations,” Kelty added.
“Furthermore, the longstanding Saudi-led economic and political boycott of Qatar is bound to have played a large part in the decision,” Kelty continued.
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”.
Kelty added however that the exit of Qatar “is suggestive of growing dissatisfaction among OPEC nations with the Saudi’s leadership”.
“We’d suspect that many of the members are wary of how much influence the United States has over Saudi Arabia and whether this leads to decisions that are not necessarily in the best interests of OPEC,” Kelty stated.
Qatar’s decision “should not impact the decision to make production cuts this week,” according to Kelty, who said “the real issue is the scale of any cuts, along with timeframe and baseline against which production will be reduced”.
“We remain concerned that any cuts may well be insufficient to curb oversupply in the near term and that prices will struggle to recover the highs of recent months,” Kelty added.
Michael Burns, an oil and gas partner at law firm Ashurst, said Qatar’s decision to leave OPEC is “a very interesting development”.
“Perhaps the bigger question is whether other OPEC members may look to follow suit,” he commented in a statement sent to Rigzone.
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