Qatar's natural gas focus made it a less useful OPEC, but the country's departure from the cartel still carries symbolic importance.
UNITED NATIONS — The Gulf state of Qatar announced this week that it will leave the OPEC oil cartel in January, ending its nearly six decades of membership and marking an end of an era for OPEC itself.
“Qatar’s departure is symbolically very important.”
Bob McNally is president of the Rapidan Group and served as an energy adviser to President George W. Bush.
Qatar, he says, produces less than 2 percent of OPEC’s oil, but was one of OPEC’s first members and helped bridge connections between OPEC and other countries.
“By leaving OPEC amidst its dispute with Saudi Arabia and UAE, its broader dispute, is another sign post that your grandfather’s and grandmother’s OPEC of yore — meaning an Arab Gulf-driven organization led by Saudi Arabia — is yesterday.”
The talk at OPEC’s meetings in Vienna this week is of “OPEC Plus,” an informal grouping of OPEC’s core members plus 10 additional countries including Russia, Mexico and Malaysia. OPEC Plus has worked since 2017 to limit global oil production in the hopes of boosting demand and prices.
And of all those OPEC Plus countries, Russia looms the largest.
“The Russians are playing hardball. They don’t want to have to cut production. They want to contribute the absolute minimum. And the Saudis have made it very clear for a few years now: ‘If Russia doesn’t go along, we don’t go along.’ ”
Russia signaled this week that it will help control oil production through 2019, but global markets can swing a lot in a year, and Russia cooperation past then is in doubt.
“Controlling supply of oil to keep oil prices stable has been vitally important not only for the oil industry but for economic and geopolitical stability as well. So it’s a really important question for the world whether we have anybody, any group out there able and willing to manage the supply of oil to keep prices stable.”
With uncertainty swirling over multilateral groups like NATO, the EU or G20, perhaps it’s time to add OPEC to the list.