December 3, 2018 / 5:57 PM / 9 days ago

Energy markets assess fallout of Qatar's exit from OPEC

(Reuters) - Days before an OPEC-led meeting aimed at tackling a recent slide in oil prices, Qatar, the Organization of the Petroleum Exporting Countries’ (OPEC) smallest oil producer and also the world’s biggest liquefied natural gas (LNG) exporter, has announced it would quit the group in January.

FILE PHOTO: Saad al-Kaabi, Minister of State for Energy Affairs, speaks during a news conference in Doha, Qatar, December 3, 2018. REUTERS/Eric Knecht/File Photo

The following are analysts’ views on the likely impact on oil and LNG markets:

AYHAM KAMAL, EURASIA GROUP:

“The withdrawal of one of the first states to join the organization will not have a material impact on OPEC’s influence and ability to manage market cycles.

“The Qatari leadership is no longer interested in remaining an active part of an organization that largely shuns it. OPEC is now practically under the influence of Saudi Arabia and the UAE, with Qatar either intentionally or unintentionally left on the margins.”

WOOD MACKENZIE:

OIL: “Qatar has minimal spare capacity so its 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 scepticism in the cartel’s ability to control production.”

LNG: “Since lifting the 12-year ban on development of the North Field in April 2017, Qatar unveiled ambitious plans to increase its LNG capacity from 77 million tonnes per annum to 110 million tonnes per annum.”

“Qatar’s OPEC exit underlines the country’s aim to maintain its place in the global LNG market.”

FRANK SCHALLENBERGER, HEAD OF COMMODITY RESEARCH, LBBW:

OIL: “With an output of some 0.6 mbpd (million barrels per day) and very limited possibilities for increases, Qatar is not an important player on the supply side.

“Basically it only means one problem less for Saudi Arabia - as relations between OPEC’s de facto leader and Qatar have not always been the best.”

LNG: “Qatar said they wanted to focus on natural gas production - so this could be a first step to bigger supply and lower prices.”

“I think in the short term this will make not a big difference on the LNG market. If they really are able to boost production, of course this could mean that their share of the LNG market will even get bigger - and that the U.S. will lose market share on the export markets in the future.”

NAEEM ASLAM, CHIEF MARKETS ANALYST, THINK MARKETS:

OIL: “Qatar leaving the OPEC isn’t as great news for the oil market and the market participants haven’t digested the full impact of this news. Basically, Qatar is have brought the biggest weapon out and it only means more instability between the Qatari and Saudi relationship.”

“In fact, we would not be surprised if other counties start to follow the same path and then we have no control over supply or demand as each individual country could just do what they like.”

LNG: “Other producers can certainly look towards Qatar and work directly with Qatar, and mitigate their dependence on countries such as the U.S., which does not have the same position as Qatar or have the reserves that Qatar has.”

“Major impact would be on China’s dependency on the U.S. and we see that relationship definitely going down from here.”

CARLO ALBERTO DE CASA, CHIEF ANALYST, ACTIVTRADES:

“Analysts are probably focusing on the symbolic impact of this decision, which is showing some conflict inside the producers’ organisation.”

COMMERZBANK:

“It remains to be seen whether Qatar will sign up to the production cuts even as a non-OPEC member. Qatar recently produced 610,000 barrels per day and contributed 38,000 barrels per day to the production cuts.”

JIM RITTERBUSCH, PRESIDENT, RITTERBUSCH AND ASSOCIATES, PRESIDENT:

“While we are not viewing Qatar’s exit from the Cartel as a significant price driver, it does appear to diminish the historical clout of OPEC while increasing the importance of a Saudi-Russian alliance in coordinating production decisions.”

Reporting by Swati Verma and Arpan Varghese in Bengaluru; Editing by Marguerita Choy

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