Qatar’s exit from Opec deepens rift with Saudi Arabia
Departure of first Arab country comes as oil cartel faces fire from Trump
Qatar has made a shock decision to quit Opec after 57 years of membership, billing its move as an apolitical attempt to refocus on expanding its natural gas exports.
But its withdrawal has stoked suspicion that Qatari leaders are seeking to irritate their regional rival Saudi Arabia and curry favour with US President Donald Trump.
Saad al-Kaabi, Qatar’s minister of state for energy affairs, said the decision would enable “focused efforts” on gas production. But it created shockwaves, making Qatar the first Middle Eastern country to abandon the producer group and further fracturing Opec’s most powerful bloc, the Gulf states.
Several hours later, Sheikh Hamad bin Jassim Al Thani, Qatar’s former prime minister, piled into the debate, criticising Opec and by extension the Saudi rulers who have dominated the cartel for decades as the world’s swing producer.
“This organisation has become useless and adds nothing to us,” he tweeted. “It is only being used for purposes aimed at harming our national interest.”
His intervention reinforced analysts’ views that Doha’s exit was a reaction to a diplomatic and economic embargo imposed on Qatar by Saudi Arabia and the United Arab Emirates in 2017 — a blockade that has pushed Doha further into the arms of Turkey and Iran.
The embargo was designed to punish Doha for its maverick regional foreign policy, which Saudi Arabia and the UAE says was masterminded by Sheikh Hamad, and allegations by Riyadh and Abu Dhabi that Doha has supported terrorism — a charge Qatar vehemently denies. Riyadh has also been irked by Qatar’s perceived efforts to promote political Islamist movements across the Middle East via its Al Jazeera news channel.
“The longstanding Saudi-led economic and political boycott of Qatar is bound to have played a part in the decision,” said Ashley Kelty, oil and gas research analyst at Cantor Fitzgerald Europe. “The exit of Qatar is suggestive of growing dissatisfaction among Opec nations with the Saudis’ leadership.”
Leaving a cartel that has historically received regular western condemnation is also a deft nod to the US, where Mr Trump has been voluble in putting pressure on Opec to keep oil prices down.
“Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy!,” he tweeted last month. “Thank you to Saudi Arabia, but let’s go lower!”
After Mr Trump’s initial support for the embargo, the US has in recent months increased efforts to bridge the Gulf divide that has turned its allies against one another while Washington seeks to contain Iran.
Diplomats have said western powers would try to use increased leverage over Saudi Arabia in the wake of the killing of journalist Jamal Khashoggi to end Riyadh’s dispute with Qatar. Videos purporting to show Saudi-Qatari border posts being prepared for reopening recently went viral as such speculation mounted.
Few analysts regard Qatar’s exit as a major problem for Opec, which is holding a ministerial meeting later this week in Vienna that will dictate oil policy for 2019.
Qatar, which only produces around 600,000 barrels a day of crude, is a marginal player in a body where a range of members from Gulf sheikhdoms to socialist Venezuela try to overcome divergent political ideologies to agree on collective action on oil output.
“It’s not of any significance for the operation or effectiveness of Opec as an organisation,” said veteran Opec observer Paul Horsnell, head of commodities research at Standard Chartered.
The six-member Gulf Cooperation Council, which had been touted as the Arab world’s only functioning trade bloc, had already been put on life support by the Saudi-led embargo.
For years, Saudi Arabia, Kuwait, the UAE and Qatar, all GCC members, had gathered to co-ordinate before all other Opec members — including their regional rival Iran — met to discuss any changes to production. Since the embargo, however, Qatar has been barred from these closed-door discussions.
Saudi Arabia has for the past two years focused on its relationship with Russia and, increasingly, the US, calling into question the importance of Opec as an organisation.
“[Qatar’s exit] may not seem like a big deal,” said one oil analyst. “But it’s symbolic and the Saudis have only done this to themselves.”
Qatar has spent billions to shelter its economy from the impact of the embargo as it gears up to host the Fifa World Cup in 2022, undermining attempts to bring the maverick state to heel.
The opening up of new trade routes to “beat the blockade” has been bolstered by a planned expansion of Qatari LNG exports from 77m to 110m tonnes a year, further integrating the tiny state into the global economy.
Qatar has been working with other states, including Russia, to develop the Doha-based Gas Exporting Countries Forum, dubbed the “gas Opec”.
“Clearly Qatar doesn’t feel that any concrete progress will be made and that it would prefer to further remove itself from Saudi Arabia’s sphere of influence,” said Capital Economics’ Jason Tuvey in a note.