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Oil prices soar after US, China suspend trade hostilities

03 December, 2018, 22:11 | Author: Melinda Barton
  • Saudi Crown Prince Mohammed bin Salman

The surprise announcement from Qatar's minister of state for energy affairs, Saad Sherida al-Kaabi, again throws into question the role of the cartel which had to turn to non-members to push through a production cut in 2016 after prices crashed below $30 USA a barrel.

With daily oil production of around 600,000 to 700,000 barrels and a larger natural liquefied gas profile, Qatar has made a decision to exit the Organisation of Petroleum Exporting Countries (OPEC) in 2019, to leverage on growing its LNG portfolio.

Turkey and Qatar reached agreements on a wide range of issues, including cooperation in the areas of security and military during Qatari Emir Sheikh Tamim bin Hamad al-Thani's visit in Istanbul for the Turkey-Qatar High Strategic Committee meeting last week, the Arab Weekly reported on Friday.

"Qatar's decision to exit OPEC over political disagreements with allies could sour some of the bullish sentiment, though Qatar is one of the smaller Gulf oil producers", said Mike van Dulken and Artjom Hatsaturjants of Accendo Markets.

Qatar is to pull out of Opec after almost 60 years of membership of the oil cartel, but will attend a meeting this week that will discuss cutting output.

It also shares the world's largest natural gas field, the North Field, with Iran.

Crude oil has not been included in the list of hundreds of products each side has slapped with import tariffs, but traders said the positive sentiment of the truce was also driving crude markets.

In an announcement Monday, the country said it will leave the organization on January 1, 2019, because of the need for "technical and strategic" change, Reuters reports.

The cartel's largest member, Saudi Arabia, along with three other countries, has cut trade and transport ties with Qatar for the past 18 months, accusing Qatar of supporting terrorism and the Saudis' largest regional rival, Iran. OPEC nations like Ecuador, Gabon and Indonesia have either withdrawn or suspended their membership in the past, only later to rejoin.

Qatar produces only 600,000 barrels per day (bpd), compared with the 11 million bpd produced by Saudi Arabia, the group's biggest exporter.

But Doha is an influential player in the global LNG market with annual production of 77-million tonnes a year, based on its huge reserves of the fuel in the Gulf. It traded at just over $61 a barrel Monday.


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