“Qatar has made a shock decision to quit Opec after 57 years of membership,” say Simeon Kerr and Anjli Raval in the Financial Times. The small Gulf state says the move will allow it to concentrate on gas production. Qatar, the world’s biggest exporter of liquefied natural gas, has been boycotted by some of its Arab neighbours over allegations that it funds terrorism. So its departure might tell us more about the geopolitical climate in the Middle East than the direction of the oil price.
Qatar’s influence on Opec always looked limited in any case. It’s “Opec’s 11th biggest oil producer so is one of the smallest in the cartel, comprising less than 2% of Opec’s output”, says the BBC. Opec and Russia have been contemplating a small cut to production to shore up an oil price that’s fallen off a cliff in the past few weeks, from $87 a barrel in early October to $61 in November.
Opec isn’t as important as it used to be either. It is now only one force in the oil market that faces oversupply while demand is predicted to tail off. Its main problem “is surging production in the US where output, mostly from its southern shale fields, has grown by about two billion barrels per day (bpd) within a year to more than 11.5 million bdp,” says Christopher Johnson on Reuters.
Production from Texas alone eclipsed Iraqi levels in September, says Barclays. Opec will struggle to give the price of oil a significant boost.