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As ministers from OPEC and other major oil producing countries prepare to gather in Vienna for a crucial meeting later this week, the cartel is absorbing yet another hit to its waning influence.
The latest blow to the Organization of Petroleum Exporting Countries (OPEC) was delivered on Monday when Qatar announced it’s quitting the bloc next month to focus on liquefied natural gas production.
Qatar is a relatively small oil producer and its decision to end its nearly six-decade-long membership in OPEC is not expected to have a major influence on energy prices.
Qatar’s Energy Minister, Saad Sherida al-Kaabi, dismissed the notion that the decision was driven by Doha’s ongoing feud with OPEC’s de facto leader Saudi Arabia. Riyadh has led a land, sea, and air blockade against the Qatar since June 2017.
Nevertheless, some analysts see Doha’s break with cartel as deeply symbolic, especially given the fact OPEC has in the past overcome major divisions to coordinate energy policy.
“More than anything, we suspect that Qatar’s withdrawal from OPEC has been spurred by its ongoing dispute with Saudi Arabia and its allies,” Jason Tuvey, Capital Economics senior emerging markets economist, wrote in a note to clients.
Amy Myers Jaffe, senior fellow at the Council on Foreign Relations, said Qatar’s decision underscores how the the blockade has added urgency to Doha’s slow drift from Riyadh’s sphere of influence.
“Qatar sought to reduce its exposure to Saudi oil policy and Saudi Arabia generally since the 1990s when the two countries first clashed over border disputes,” she told Al Jazeera. “Today, in light of the Saudi-led blockade against Doha, ensuring Qatar’s natural gas industry is independent of Saudi decision making on oil is all the more pressing.”
Ellen Wald, senior fellow at the Atlantic Council’s Global Energy Center told Al Jazeera that Qatar’s decision to leave the cartel could be a harbinger, as oil policy becomes more concentrated in the hands of Saudi Arabia and non-OPEC member Russia.
“It could signal that smaller producers are growing disgruntled with the cartel’s dominance by Saudi Arabia and Russia,” said Wald. “If a group of small producers decide to exit the cartel it will decrease OPEC’s influence in the market.”