OPEC really does not exist anymore……
After 57 years as a member of OPEC when the oil rich states were able to strong arm the west with oil embargoes and attacks on the global economy, mainly in the 1970s. Qatar has seen better days, now that the Saudis have led a boycott on its smaller neighbor. Qatar will withdraw from the oil cartel on January 1, 2019 according to Qatari Energy Minster, Saad al-Kaabi. Despite making the claim that the decision to leave the cartel was driven by technical and historical factors, many oil experts feel that the Saudis have been putting too much pressure on the oil rich state – Qatar becoming more isolated each day.
Despite being a smaller oil producer in the OPEC group, Qatar is one of the largest producers off LNG, liquefied natural gas, in the world. According to the oil minister in Doha, the Saudi-led boycott that started 18 months ago is not the reason that Qatar is pulling out – but major market players think otherwise.
Along with three other Arab states, Saudi Arabia has cut commerce and transportation ties with Qatar in an effort to pressure Doha to move to a more moderate stance. Since rallying to a 4-year high in October, oil prices have dropped 25 percent but the Qatar announcement of leaving OPEC will have little impact on prices. However, the announcement that hit the front page 24 hours ago, helped oil to firm up and reverse the trend lower. The announcement being that China and the US have decided to temporarily shut down the trade war – they are giving the trade tariffs a rest. Oil of course rallied on this news.
Both Brent and WTI traded higher by approximately 5 percent on the announcement.
We see a break up of OPEC and eventually war between the Saudis and Iran in the coming 24 months.