As far as break-ups go, this one was abrupt
.. and seemingly out-of-the blue.
Here's how Qatar's energy minister delivered
the news that his country's 57-year membership
of the world's most important group of oil-producing
nations was coming to an end.
The state of Qatar has decided to withdraw
its membership from the Oil Producing and
Exporting Countries, or OPEC, effective January
2019.
This communication was communicated to OPEC
this morning.
OPEC is made up of fifteen countries.
It was founded in 1960 with the goal of helping
members benefit from a steady rise in oil
prices.
So ... just how big a role does it play in
the global oil industry?
At present, OPEC nations hold almost 82 percent
of global oil reserves.
Qatar - by itself - controls 1.7 percent of
the world's stockpile.
It might not sound significant - but for a
country of just 2-point-7 million, it punches
above its weight.
The decision to withdraw from OPEC will enable
the country to increase production outside
of the cartel's constraints.
... But it's also being read as a slight to
the group's leading member Saudi Arabia, which
last year instigated a boycott of Qatar .. accusing
it of supporting terrorists:
Qatar's energy minister denies there's a political
motive:
It has nothing to do with the blockade.
The timing is, if you look at the status of
the OPEC if any country wants to withdraw,
what it has to do is basically put in writing
its request or its decision to withdraw and
it basically withdraws in the next calendar
year.
Qatar's decision to leave OPEC may not cause
major damage to the group.
But it certainly calls into question its reputation
for putting shared economic interests
above politics.
