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Qatar’s decision to quit OPEC raises doubts about the future of the oil cartel

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The decision by the State of Qatar to leave the Organisation of the Petroleum Exporting Countries (OPEC) by January 2019 has raised eyebrows and set off speculation as to the extent of tensions and discord within the 15-member intergovernmental organisation.

The dominant analysis centres on Qatar’s spat with Saudi Arabia and the Qataris’ desire to abandon an organisation which many feel is overly influenced by the Saudis. Notwithstanding official Qatari denials that their decision to leave OPEC is linked to the Saudi-led embargo, nonetheless the Saudis are likely to interpret the move as a further sign of Qatar’s growing independence in the Arabian Gulf region.

Beyond the immediate political effect, Qatar’s decision raises difficult questions about the future of OPEC. There will be fears in Riyadh about a sudden meltdown, especially in light of speculation that Iraq may be the next country to leave the organisation.

Scare mongering aside, OPEC is faced with difficult economic and political choices going forward. As the economic and political value of oil diminishes in the very long term so does the relevance of an organisation like OPEC. In the short to mid-term however, Saudi Arabia’s established behaviour of weaponising oil to advance its foreign policy may no longer be sustainable.

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© Middle East Monitor