Qatar announced its withdrawal from OPEC at the wrong time, the expert believes

© AP Photo / Hasan JamaliДобыча oil. Archival photoQatar announced its withdrawal from OPEC at the wrong time, the expert believes© AP Photo / Hasan Jamali

Qatar picked a bad time for the announcement of the withdrawal from OPEC, the decision caused concern in the markets, but a major impact on oil prices this move will have, said RIA Novosti head of the Department of Economics, center for advanced studies, «al-Mustaqbal» in Abu Dhabi Ali Salah.

In Vienna on 5 December will be the meeting of the Ministerial monitoring Committee of OPEC+, which should make for countries-participants of the transaction recommendation about whether and how much to cut oil production to balance the market. Thursday, December 6, the recommendation will discuss the OPEC conference, and then, on December 7, all OPEC countries+.

«A limited volume of oil production, Qatar will not have a major impact on oil prices, as well as the results of agreements within the framework of the transaction OPEC+ next year in Vienna, but, nevertheless, he picked a bad time for the announcement of the withdrawal from OPEC ahead of the meeting of the largest oil producers and discuss their future strategy, when the price of oil fell, and this statement has caused new concern in the market,» said Salah.

In his opinion, the concerns have arisen because of fears of how Qatar behaves after the release of OPEC and whether it will be able to significantly increase production, when it is not bound by any commitments about its restriction. «However, we can say that Qatar is unlikely to have opportunities so to increase production after the exit from OPEC that it had some critical influence on the market», — said the expert.

He did not believe that the decision of Qatar to leave the cartel could weaken the organization and be an example for other members. «Qatar is not unique in the history of OPEC. This organization and had experienced the withdrawal from its ranks, a suspension of different countries, in particular Ecuador, Indonesia, Iraq, but the benefit of OPEC, its huge role in stabilizing the market and promoting the interests of its participants are obvious, and they don’t want to lose,» added Salah.

OPEC and several non-organisation countries (OPEC+) agreed in late 2016 in Vienna on the reduction of oil production to 1.8 million barrels per day from the level of October 2016. The contract started from the beginning of 2017 and has been extended until the end of 2018. In June 2018 OPEC+ agreed goal is to escape from the fulfillment of the terms of the agreement, which then accounted for 47%. Recently traders talking about the risk of oversupply of the commodity on the market in 2019. It may encourage OPEC to return to the reduction of oil production.

Qatar announced its withdrawal from OPEC at the wrong time, the expert believes© Vitaly Pedicellata just Catharsis

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