Qatar frees itself of OPEC
Nonetheless, given Qatar's national strategic needs and forecasted trends in global energy markets, the decision was highly sensible. Authorities in Doha have determined that it best advances Qatari interests to focus resources on natural gas and liquefied natural gas (LNG) - cleaner forms of energy than oil.
In light of Qatar's cabinet reshuffle last month, we are witnessing a younger leadership in Doha stress efficiency in policymaking in order to help the emirate achieve long-term prosperity in the face of myriad challenges stemming from the unresolved 18-month-old Gulf crisis.
Given that the prospects for natural gas and LNG are brighter than oil as peak demand will come far sooner for oil than gas, officials in Doha do not believe that funneling resources toward OPEC is prudent.
Although Qatar's decision shocked many, it was not too surprising.
Despite joining OPEC in 1961, one year after the group's founding, Qatar has never held a lot of influence over the cartel. Of the 30 to 40 million barrels of oil that OPEC produces each day, less than two percent (approximately 600,000 barrels) comes from Qatar. Qatar ranked the 11th oil richest of OPEC's 15 members, and the least oil wealthy among the cartel's other Arab Gulf members: Kuwait, Saudi Arabia, and the United Arab Emirates (UAE).
To be sure, Qatar's exit from OPEC does not spell the end of the emirate's oil sector. To the contrary Qatar will now produce and export oil without the restraints that the cartel has imposed on Doha.
|Doha is determined to refuse playing games with rules written by the Saudis|
In fact, according to Qatar's Minister of State for Energy Affairs Saad al-Kaabi, Qatar Petroleum plans to increase production capability to 6.5 million barrels oil equivalent in the upcoming 10 years (up from 4.8 million).
Ultimately, Qatar's decision was based on the assessment that the country is better off producing and exporting oil outside of OPEC (a de facto Saudi-led cartel), from where the Qataris might find themselves possessing more influence vis-à-vis OPEC than they ever did when their country was a member.
Many are asking what impact Qatar's withdrawal from OPEC will have on the global oil market.
In the near-term, Qatar's exit will probably have a limited effect given that the emirate produces such a small share of OPEC's total output.
However, it will be important to observe if Qatar's decision prompts some of the other less influential members of OPEC to follow Doha's lead. Under such circumstances, Qatar's decision could certainly weaken OPEC's influence, making the cartel less relevant in the global energy landscape.
Inevitably, political considerations that come into play must be considered against the backdrop of Qatar - as well as other OPEC members - being increasingly opposed to Saudi Arabia's political agenda on the international stage which, at least at certain times, strongly drives OPEC decision-making.
|Qatar will now produce and export oil without the restraints that the cartel has imposed on Doha|
Undoubtedly, Qatar's exit will undermine Saudi Arabia's capacity to maintain the cartel's unity. Ultimately, Qatar's decision may prompt the largest oil producers in the cartel, which possess the most influence, to change the ways in which OPEC conducts its affairs to give the smaller producers in the group more incentive to remain members.
Officials in Riyadh will interpret Doha's decision as a swipe at Saudi Arabia, especially given that Qatar announced its exit just before a meeting this week in Austria of OPEC and non-OPEC oil exporters to address a slide in oil prices.
The symbolism is significant given that Qatar, while not a major oil producer, is an early member of OPEC and Qatar's decision will make the cartel appear weaker.
Read more: What's behind Qatar pulling out of the Saudi-dominated OPEC cartel?
Furthermore, as Rauf Mammadov opined, Doha's decision may also undermine Riyadh, because Qatar's withdrawal will likely empower Iran which has long opposed the Kingdom's dominant hand in OPEC.
Today in Doha, there is a consensus that Saudi Arabia, with the Kingdom's de facto ruler Crown Prince Mohammed bin Salman (MbS) at the helm, is conducting a destabilising foreign policy that severely undermines the ability of states across the Middle East to achieve their long-term development objectives.
Clearly, by leaving OPEC, Qatar's leadership is sending a message that Doha is determined to fully escape Saudi Arabia's orbit of influence that many Saudi-led institutions such as OPEC help Riyadh sustain.
|Qatar, while not a major oil producer, is an early member of OPEC and Qatar's decision will make the cartel appear weaker|
At this juncture, Qatar is keen to communicate to the blockading countries that Doha is determined to refuse playing games with rules written by the Saudis.
While officials in Doha firmly emphasise that Qatar's exit from OPEC was not a political decision, it is evident that the political dynamics which once pressured Doha to remain in Saudi-led institutions are no longer in play.
To be sure, Qatar's decision to leave OPEC would have likely been unimaginable only several years ago and especially so in the pre-1996 era when Doha was highly sensitive to the interests of Riyadh.
However, the influence that Saudi Arabia once exerted over Qatar has dramatically diminished since MbS and his Abu Dhabian counterpart Crown Prince Mohammed bin Zayed sought to blockade Qatar into capitulating to Riyadh and Abu Dhabi's demands.
|Qatar's exit will probably have a limited effect given that the emirate produces such a small share of OPEC's total output|
Ironically, Qatar exercising a relatively independent foreign policy in the post-Arab Spring period was what ultimately drove Saudi Arabia and the UAE to blockade Qatar, yet the siege of Doha has once again proven to have reverse effects that MbS will be likely be challenged to address.
Looking ahead, while the political and economic ramifications of Qatar's exit from OPEC have yet to be fully realised, Doha's decision will be felt in Riyadh when the GCC holds its next annual summit this month.
Although it was unlikely that this meeting of representatives of all six GCC members had a good chance of leading to a resolution of the Gulf dispute, Qatar's withdrawal from OPEC can only expose how the Saudi/UAE-led bloc have even less common ground with Qatar to build on.
Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.