Letters | Qatar to leave Opec: a smart business move that plays to its core strength

Amid the Saudi-led economic blockade, and its own marginal position in Opec, Qatar has wisely opted to focus on its global lead in natural gas production

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Saad al-Kaabi, Qater’s energy minister, speaks to the media before an Opec meeting in Vienna on December 6. He has said the decision to quit Opec is not linked to the political and economic boycott imposed in June 2017 by de facto bloc leader Saudi Arabia, as well as the UAE, Bahrain and Egypt. Photo: EPA-EFE

Published: 1:01pm, 29 Dec 2018Updated: 1:01pm, 29 Dec 2018

The surprise move by Qatar to quit Opec next month might seem a minor flap, even though Qatar has been a member of the oil cartel since 1961 (“Qatar to quit Opec amid tensions with Saudi Arabia”, December 3). Indeed, its oil minister, Saad al-Kaabi, says the decision is not linked to the ongoing economic boycott imposed by Saudi Arabia and its allies, the United Arab Emirates, Bahrain and Egypt.

Yet questions abound: what does this mean for Opec’s future? Will this departure affect oil prices? Does it suggest internal turmoil within Opec?

The announcement came on the heels of a recent decline in oil prices. Yet this drop is attributed to supply and demand; ongoing trade tensions between the United States and China; and Russia’s willingness to accept the price of oil at US$60 per barrel.

Energy forecasters wonder whether consumers will continue to benefit from low oil prices in 2019. After all, Russia, a non-Opec member, decided recently to join the bloc in collectively cutting production by 1.2 million barrels, which would seem to automatically trigger a hike in prices. And the Saudis last week accelerated their plan, reportedly opting to cut their own production by 322,000 barrels a day, rather than the previously announced 250,000 barrels a day, for the first six months of 2019.

A giant image of the Emir of Qatar, Sheikh Tamim bin Hamad al-Thani, adorns a tower in Doha, Qatar. Qatar’s withdrawal from Opec highlights its long-term strategy to diversify its resources and position itself for economic opportunities in the 21st century. Photo: AP

Should we brace ourselves for skyrocketing prices at the pump, even replays of long queues for petrol? Not necessarily.

From a political angle, Qatar saw no reason to maintain membership in Opec, an organisation where resolute enemy Saudi Arabia holds sway over other members.