In a shock move, Qatar has withdrawn from OPEC – raising questions over the loyalty of the bloc’s remaining members.
The Middle Eastern nation’s decision comes as it looks to shake of constraints of the bloc and increase its sales as analysts say member states are becoming increasingly unhappy with OPEC leader Saudi Arabia and the influence the US is able to exert on the kingdom.
Ashley Kelty, from Cantor Fitzgerald, said it would have “little impact” on the bloc in the short term, although it would have to work harder to ensure the loyalty of its other members.
Oil prices climbed today from last week’s lows as the US and China agreed a ceasefire in the trade war that has been dominating the markets, which comes as OPEC and its ally Russia are set to agree cuts in a meeting this week to bolster prices.
Mr Kelty said: “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.
“Qatar is a tiny oil producer – accounting for less than 2% of the cartels 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.
“Furthermore, the longstanding Saudi-led economic and political boycott of Qatar is bound to have played a large part in the decision.
“We don’t think it makes much of a difference to the ability of OPEC to influence global supply (and ergo prices), as it is only the support of Russia that allows the cartel to maintain its current relevance.
“The exit of Qatar is suggestive of growing dissatisfaction among OPEC nations with the Saudi’s leadership, and we’d suspect that many of the members are wary of how much influence the US has over Saudi Arabia, and whether this leads to decisions that are not necessarily in the best interests of OPEC.
“We are of the view that this will have little short term impact on OPEC, but the Saudis are certainly going to have to work harder to maintain agreement between the group on production cuts.”