Qatar will withdraw from the Organization of the Petroleum Exporting Countries (OPEC), the Persian Gulf nation's Energy Minister Saad Sherida al-Kaabi announced.
The decision to quit the bloc of 15 oil-producing countries that account for a significant percentage of the world's oil production was confirmed by Qatar Petroleum, the state oil company, last Monday.
To know more about the issue we reached out to Dr. Luciano Zaccara, research assistant professor in Qatar University.
Here is the full text of the interview:
Q: What are the reasons behind Qatar’s decision to withdraw from OPEC? Is it politically and economically right decision?
A: Qatar is only producing 600,000 barrels per day, but it is the first exporter of LNG. Economically speaking it will not affect Qatar’s income coming from oil export, neither the overall OPEC production, since altogether it is producing 32.5 million barrels daily. At this point it seems logical for Qatar to focus on gas production and marketing, moreover having in mind Doha is hosting the GECF and shares one of the biggest gas fields with Iran, without having any constraints on their oil production from the OPEC cartel.
Q: Is there any relation between Qatar’s decision and the Saudi policy in the organization?
A: The timing of the decision, just few days before the 9th December PGCC Riyadh summit, seems to show the decision is somehow related to the current diplomatic rift between the two states and the fact that Qatar’s influence in the decision making process of the organization is very limited. Mainly controlled by Saudi Arabia with the required consensus with Iran and Iraq, but also with non-OPEC members such as Russia, remaining within OPEC seems now not very in line with the general foreign policy and economic goals of Qatari government. However, remaining in OPEC did not prove to be harmful for Qatar either.
Q: Any relation between Trump’s anti-OPEC policies and Doha decision?
A: It is clear that Trump is worried about the oil price ramping up, as he tweeted, and that he prefers a united OPEC that can prevent the control of oil prices, but I cannot see that Doha decision has been affected by the U.S. policy on the matter.
Q: How do you see the future of the 60 years old organization?
A: The OPEC has been very important in some periods of its history, and certainly it will remain as an important production cartel of a very limited energy resource worldwide for the next 30 to 50 years. However, their efficiency in controlling the prices, and making the states members to comply with the established quotas has been very limited in the last 20 years. With extra-OPEC members being very influential in the short and long term, depending on the success of the shell oil production, the OPEC capacity of having a determining role on oil price will be significantly reduced in the coming decades.
Q: At the present moment which Iran is under U.S. and its regional allies’ pressure such as Saudi Arabia and UAE to cut Iran’s oil export to zero, will Doha withdrawal from OPEC affect the U.S. goals toward Iran?
A: Sanctions against Iran so far proved to have a very limited impact neither in the Iranian production nor in the oil price. Qatar withdrawing from OPEC does not mean the country will withdraw from the market either, meaning that probably the oil market will not suffer from neither situations. This is not necessarily harmful for U.S. interest in the region, but it may increase the quota (of power and production) that OPEC may allocate to Iran, which is not in line with the U.S. policy towards Iran.
Q: Will this decision affect China’s One road-One belt project?
A: As far as the price is not going up, China will not suffer economically speaking. Neither from the political point of view, since China has been reluctant of getting dragged in the many regional confrontations that affect the region. The Chinese government has cordial relations with all the governments, including Iran, Saudi Arabia and Qatar, and neither the Saudi-Qatari crisis nor the Saudi-Iranian confrontation have forced China to choose sides and to cut ties or reduce imports from any of the three producers. That said, the China project is a long term project that includes many countries and aspects that seems will not be affected by this politically driven decisions that will have very limited economic impact on the oil market nor on the links that China had built with the different state actors along the road-belt.
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