By Ovunc Kutlu
ANKARA (AA) – The rift between the Gulf nations has hit the Organization of Petroleum Exporting Countries (OPEC) on Monday with Qatar's decision to leave the cartel after 57 years.
The move could be a point-of-no-return in the medium-term for Qatar, given its strained relations with Saudi-led countries in the Middle East. The country could have burned all its bridges leaving it isolated in the Arab world in the long-run.
Doha said the decision to leave OPEC on Jan. 1 stems from its long-term plan to focus more on natural gas production and investments. For the world's liquefied natural gas (LNG) champion for 12 consecutive years, the announcement carried a more economic focus rather than a political one.
Qatar has been the world's biggest LNG exporter every year since 2006, having a 30 percent share in the global LNG market, according to British Petroleum's Statistical Review of World Energy published annually.
Natural gas accounts for more than 70 percent of Qatari government revenues, around 60 percent of its gross domestic product (GDP), and approximately 85 percent of its earnings from exports, according to government data.
Its 2.4 million population, which consists of 11.6 percent Qatari and 88.4 percent foreign workers, enjoyed $63,500 GDP per capita in 2017 when total GDP was recorded at $167.6 billion, the World Bank data shows.
Having the third largest gas reserves in the world, after Russia and Iran, Qatar plans to increase its LNG production capacity per annum from 77 million tons to 110 million tons, Qatar Energy Minister Saad Sherida Al Kaabi said on Sept. 26.
After the blockade by Saudi-led countries in June 2017, Qatar had invested $200 billion on infrastructure in order to open up new trade routes, and invested $50 billion in its banking sector to keep it buoyant, according to global media reports.
The Qatar Investment Authority, the country's national wealth fund, is estimated to have $330 billion in assets, investing both domestically and internationally from the banking, service sectors to energy and the sports industry.
The country has also been diversifying its gas-dependent economy with international brands such as Qatar Airways, the Al Jazeera television network, and through the purchase of French football club Paris Saint-Germain in 2011.
– Small oil share in OPEC
Qatar's departure from OPEC is unlikely to have much impact on the cartel's production, given that it only has a small output share in the organization.
The country's oil production was 609,000 barrels per day in October, according to OPEC's Monthly Oil Market report in November. This constituted 1.8 percent of OPEC's total production in October, which stood at 32.9 million barrels per day (bpd), the report showed.
As a comparison, the world's biggest crude exporter Saudi Arabia reached a record high level of 11.2 million bpd of crude oil production most recently.
Qatar's decision, however, comes at a critical time when OPEC and non-OPEC oil producers, such as Russia, Kazakhstan and Mexico, are meeting in Vienna on Thursday, Dec. 6 to discuss the global oil market.
The group, dubbed as OPEC+, will look into ways to balance the market, and will probably cut output by at least 1 million bpd in order to raise oil prices.
– Cracks within the cartel
Qatar leaving the organization is, however, a symbolic decision that makes the cracks within the cartel more visible.
The Saudi-led organization had been the focus of much criticism when it decided in November 2014 not to cut production in order to support the historic decline in oil prices.
When crude prices fell to their lowest level in 12 years by plummeting below $30 a barrel in January 2016, the kingdom received more frowns from OPEC members whose economies are highly dependent on revenues from oil sales and exports.
Saudi Arabia did not refrain from swaying other OPEC members against Iran when U.S. sanctions on the country were lifted and Tehran's crude oil production and exports began to increase.
Qatar lost much of its influence in OPEC, after Saudi Arabia and three countries had taken a political stance against Doha in June 2017.
– Arab politics at boiling point
Issues surrounding Qatar, the small Gulf nation that has 11,58 square kilometers, started one and a half years ago.
Saudi Arabia, Egypt, Bahrain and the United Arab Emirates cut of all their diplomatic ties with Qatar on June 5, 2017 and accused Doha of supporting terrorism.
In addition to imposing a blockade to the small peninsula nation, the group led by Saudi Arabia released a 13-point list of demands, which required Doha to cut its relations with Iran and shut down its Al Jazeera television network.
Qatar later said the decision to end diplomatic ties was unjustified, and were based on false claims.
By leaving the world's biggest oil organization, Qatar has become the first Arab nation to do so since its foundation in 1960. Qatar had joined the organization one year after its establishment.
It can be argued that Qatar quitting the cartel will leave Doha more segregated in Middle Eastern politics, since OPEC was a forum in which Arab politics could be discussed and member states could garner support from each other.
– Relations with U.S.
Qatar's announcement to leave OPEC came three days before the organization's much-anticipated meeting on Dec. 6, raising some questions about the timing of its decision.
In the wake of journalist Jamal Khashoggi's murder, Doha could be trying to put more pressure on Saudi Arabia by showing the cracks in the cartel with its departure.
Qatar's decision could also be a result of Doha moving closer to the U.S. with the aim of establishing a new alliance with the Trump administration.
Although U.S. President Donald Trump first supported allegations against Qatar as a “sponsor of terrorism” in 2017, he later called Qatari Emir Tamim Bin Hamad al-Thani a “great friend” when the two leaders came together in the White House in April 2018.
U.S. Secretary of State Mike Pompeo later urged Arab leaders to resolve the Gulf rift, since Washington wants the Arab world unified in order to isolate Iran in the region.
Pompeo met with Qatari Deputy Prime Minister Khalid Al-Attiyah in Washington on Nov. 14 to discuss the Trump administration's proposal to form an Arab security alliance in the Middle East.
The two officials reaffirmed their commitment to the strong bilateral relationship between the U.S. and Qatar, and discussed working toward a Middle East Strategic Alliance to advance security and stability in the region, according to a White House statement.
The U.S. wants the Arab countries to end their dispute with Qatar as soon as possible in order to form a unified front against Iran. However, Doha's decision to leave OPEC could further delay that indefinitely.