Published: Wed, December 05, 2018
Money | By Wilma Wheeler

Qatar to pull out of Saudi-dominated Opec

Qatar to pull out of Saudi-dominated Opec

US crude CLc1 pulled back from a rally early in the session, trading up 5 cents to $53.00 a barrel by 12:24 p.m. EST (1724 GMT) after gaining as much as 3 percent at $54.55.

Fiona Cincotta, senior market analyst, City Index, said: 2In contrast to crude oil, gas prices are on the slide as Qatar, the world's largest exporter of liquid natural gas, has chose to sever ties with oil cartel OPEC from next year to focus more on gas.

Qatar announced Monday that it will withdraw from the Organization of the Petroleum Exporting Countries in January, as the Persian Gulf state faces a prolonged regional clash with rival Saudi Arabia. Canada is the largest source of oil imported by the U.S. Qatar has been feuding with Saudi Arabia and three other Arab nations that accuse it of financing terrorism. Qatar said its surprise decision was not driven by politics but in an apparent swipe at Riyadh, Minister of State for Energy Affairs Saad Al Kaabi said: "We are not saying we are going to get out of the oil business, but it is controlled by an organisation managed by a country".

Anas Alhajji, an oil analyst, said Qatar's decision "has no impact on the market either way whether they're in or they're out". The group coordinates policies to keep oil prices stable and to ensure a regular global supply. The Saudis, he said, will have to bear the largest share of cuts.

Qatar, which Kaabi said had been a member of OPEC for 57 years, has oil output of just 600,000 barrels per day (bpd), compared with Saudi Arabia's 11 million bpd.

Kaabi told a news conference that Doha's decision "was communicated to OPEC" but said Qatar would attend the group's meeting on Thursday and Friday in Vienna, and would abide by its commitments. But losing a long-standing member undermines a bid to show a united front before a meeting that is expected to back a supply cut to shore up crude prices that have lost nearly 30 per cent since an October peak.

Senior U.S. officials, including Trump and Pompeo, offered a spirited defense of the Saudi government after the killing of journalist Jamal Khashoggi in October by Saudi agents, in statements that have helped ease the kingdom's global isolation and fueled speculation that the Trump administration would have added leverage with its Saudi allies to end the Persian Gulf conflict. American output has soared since the price bust of 2014-15, and the U.S. Energy Information Administration estimates that the U.S. has eclipsed Russian Federation and Saudi Arabia to become the world's biggest producer. Executives of some companies that operate there, including Trump supporter Harold Hamm, the chairman and CEO of Continental Resources Inc., have said recently that they might cut back on production if oil falls below $50 a barrel, which it barely avoided in late November.

Oil surged about 5 per cent on Monday after the United States and China agreed to a 90-day truce in their trade war, but prices remain well off October's peak.

Motorists have enjoyed a break from rising gasoline prices over the past two months, but that road is about to hit a dead end if OPEC succeeds in boosting oil prices.

"That's an extra $200 million that Americans haven't left at the pump", said GasBuddy analyst Patrick DeHaan.

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