Qatar has announced plans to withdraw from Opec from January 2019.
The Gulf state said it will now focus on gas production and leave the cartel after being a member since 1961.
“Qatar has decided to withdraw its membership from Opec effective January 2019 and this decision was communicated to Opec this morning,” the energy minister, Saad al-Kaabi said.
“We will make a big splash in the oil and gas business soon,” he added.
Naeem Aslam, who is an analyst at online broker ThinkMarkets, said: “Qatar leaving Opec isn’t great news for the oil market and the market participants haven’t digested the full impact of this news. Basically, Qataris 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. Yes, for now, there is optimism that Saudi Arabia and Russia are committed to keep the supply under control. This has jolted the price of oil higher especially the fact that Canada’s largest oil-producing province is curbing the output.”
Qatar announced the decision days before the cartel is due to meet in Vienna. Countries part of the cartel will meet on December 6 to discuss oil prices.
Qatar will still attend the meeting to discuss its withdrawal.
At the meeting, production of oil is expected to be curbed after the price has plunged over the past couple of months.
Last week, Brent crude fell to $60 a barrel from $86 in October. US crude slid to below $50 a barrel.
Prices in oil, however, surged following news of the 90-day truce in their trade war between the US and China. The price of Brent crude was up by 4.7% to $62.24 in early trading.