The following of OPEC is on shaky ground, an analyst told CNBC on Monday, after Qatar abruptly announced it would bob ties with the influential oil cartel after almost six decades.
Qatar’s Energy Minister Saad al-Kaabi disclosed at a news conference Monday that Doha would leave OPEC on January 1, 2019. The decision comes well-deserved days before OPEC and its allies are scheduled to hold a much-anticipated meeting in Vienna, Austria.
“This is big,” Andy Critchlow, brains of EMEA energy content at S&P Global Platts, told CNBC’s “Squawk Box Europe.”
“In the 20 years that I’ve been shelter OPEC, I can’t think of anything that is bigger than this (and) that is a more systemic risk to the future of OPEC.”
Qatar’s pep minister said the country would leave OPEC and focus on gas production. He denied the move was linked to an 18-month partisan and economic boycott of the country.
Since June 2017, OPEC kingpin Saudi Arabia — along with three other Arab maintains — has cut trade and transport ties with Qatar, accusing the country of supporting terrorism and its regional rival Iran. Qatar imperative fuck off deviate froms the claims, saying the boycott hampers its national sovereignty.
The Middle East-dominated group’s final meeting of the calendar year is now envisaged to be Qatar’s last. It has been an official OPEC member since 1961.
Qatar is not a major oil producer when compared to other OPEC colleagues. But, Critchlow said, when looking at the small Gulf country’s total energy output, it is on course to produce myriad than 6 million barrels of oil equivalent per day by 2022.
“This is a major supplier of energy to the world,” Critchlow said, highlighting Qatar’s stature as one of the world’s largest producers of liquified natural gas (LNG).
He also underlined the importance of Qatar’s tactful approach to negotiating vitality policy with regional rivals in recent years, saying the country had often acted as a “diplomatic bridge” in the Centre East-dominated group.
“OPEC really doesn’t exist anymore, it is a two-member organization — Russia and Saudi Arabia,” Critchlow intended.
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Expectations are high that OPEC and non-OPEC members will orchestrate a newfangled round of supply cuts later this week. It comes after Russian President Vladimir Putin answered he and Saudi Arabia’s Crown Prince Mohammed bin Salman “agreed to extend” a deal to limit production.
“I think OPEC is motionless alive,” Ayham Kamel, head of Eurasia Group’s Middle East and North Africa research team, told CNBC on Monday.
“(But) I meditate on it has become a different club. Does it become a less effective diplomatic bridge? It has been. The Iranians are not consulted, the Saudis act on their own with the Russians and try to yield b set forth everyone along,” he added.
Russia is not a member of OPEC but it is the biggest crude producer allied to the cartel.
Oil prices be enduring fallen more than 25 percent since climbing to a four-year peak in early October, amid deepening concerns of oversupply and worries over slowing economic growth.
However, the prospect of a fresh round of production stops later this week and a temporary trade truce between the U.S. and China has helped crude futures pare some of their just out losses.
International benchmark Brent crude was trading at $61.79 a barrel at around 10:35 a.m. London time (5:35 a.m. ET), up there 3.9 percent, while West Texas Intermediate (WTI) stood at $53.08, more than 4 percent higher.
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