Analysts at Fitch Solutions Macro Research have said that Qatar’s decision to leave the Organisation of Petroleum Exporting Countries (OPEC) is unlikely to have a major detrimental impact on OPEC’s ability to manage the oil market.
“We estimate that Qatar’s move, while likely to fuel tensions with its GCC [Gulf Cooperation Council] neighbours, will not decisively affect OPEC’s ability to influence the oil market as Qatar represented a very small player within the cartel. We therefore do not expect it to affect the group’s ability to enact coordinated oil production cuts,” Fitch Solutions Macro Research analysts stated in the report.
The pull out by Qatar comes at a precarious time as the cartel is expected to announce coordinated production cuts to support sinking oil prices at their next meeting, which should provide key indicators for the oil market going into 2019.
“Negative consequences for OPEC might be more of a reputational order, as the organisation has been trying to attract new members and might struggle to retain some if Qatar’s withdrawal paves the way for other small producers to leave too,” the analysts added.
Also, commenting on Qatar’s decision to leave OPEC, Ann-Louise Hittle, vice president of macro oils at Wood Mackenzie, said the exit “won’t affect the volume of oil supply in the market during 2019 or risk OPEC’s goal of reducing output next year”.
“However, it does come at a time when OPEC needs to hammer out a deal in the face of market skepticism in the cartel’s ability to control production,” Hittle said in a statement posted on Wood Mackenzie’s website on Monday.
“The smaller nations of OPEC have a relatively quiet role in the group’s decision making and Qatar may also see that it has less to gain from its membership now that is not involved in the GCC,” Hittle added.