Oil surges on trade truce and expected supply cuts

Oil surges on trade truce and expected supply cuts

Oil surges on trade truce and expected supply cuts

On Monday, Qatar announced its intention to pull out of OPEC (Organization of the Petroleum Exporting Countries). Saad Sherida Al Kaabi, the Minister of State for Energy Affairs, announced Qatar's withdrawal from Opec at a press conference in Doha, and said the organisation had been informed accordingly. "Achieving our ambitious growth strategy will undoubtedly require focused efforts, commitment and dedication to maintain and strengthen Qatar's position as the leading natural gas producer", he added.

Qatar also wants to raise its oil production from 4.8 million barrels a day to 6.5 million barrels, he said.

Qatar is OPEC's 11th-biggest oil producer, accounting for less than 2 percent of total output, so its departure is most significant for any potential impact on the group's cohesion.

The Gulf state has also been at loggerheads with its much bigger neighbor Saudi Arabia, the de facto OPEC leader.

Qatar has been a member of OPEC since 1961 but has been the target of a Saudi-led political and economic boycott since June 2017.

CNBC reports that the announcement is coming days before a crucial meeting between the influential energy-rich country and its allies.

Naeem Aslam, an analyst at online broker ThinkMarkets.com, told The Guardian that the other 14 members of OPEC had not assessed the full impact of Qatar's exit.

While its oil production is one of the lowest, Qatar is said to have an influential role within the 15 member organisation.

It was also pointed out that in focusing on natural gas, Qatar is betting on the vast resources it controls in the waters that surround it. Consumption of liquefied natural gas, which is chilled to liquid form and transported on special ships, is growing faster than that of natural gas or oil. OPEC nations like Ecuador, Gabon and Indonesia have either withdrawn or suspended their membership in the past, only later to rejoin. At the same time, a deal to cut production was also signed between Russian Federation and Saudi Arabia to cap oil outputs.

They say the crisis stems from Qatar's support for extremist groups in the region, charges denied by Doha. In particular, they say specs were driving up the price of oil ahead of Iran sanctions and covered afterwards. The country reportedly produces 600,000 barrels of oil a day compared to more than 27 million from all the members of the cartel.

Mordecai Ladan, the director, DPR, said the oil and gas industry seemed to be under a new threat, which he described as the renewed dislike and global war against fossil fuels and the quest for renewable and cleaner energy.

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