Qatar said Monday it intends to leave OPEC after 57 years as part of the oil cartel.
Qatar does not produce much oil and prefers to focus on its massive natural gas business, Energy Minister Saad al-Kaabi said in explaining the decision.
Qatar is OPEC’s smallest Middle East oil producer, representing less than 2 percent of the group’s output, according to a research note Monday morning from Wood Mackenzie.
“The smaller nations of OPEC have a relatively quiet role in the group’s decision making and Qatar may also see that it has less to gain from its membership now that is not involved in the [Gulf Cooperation Council],” said Ann-Louise Hittle, vice president for oil analysis at Wood Mackenzie.
The move comes after Saudi Arabia has led an economic blockade against Qatar because of allegations that it finances terrorism, which Qatar denies.
“Rather than being a reaction to the 18-month long regional blockade against it, Qatar’s withdrawal is more likely a result of its effort to focus on its place as one of the world’s leading gas producers,” Hittle said.
It also comes during a week in which OPEC is meeting to discuss cutting oil production to raise praises.
OPEC, led by largest producer Saudi Arabia, and non-OPEC countries, namely Russia, are expected to announce a formal output cut amount during the meeting Thursday and Friday in Vienna.
Russian President Vladimir Putin said this weekend that he has reached an agreement with Saudi Arabia to renew a deal to cut oil production again next year to raise prices, after temporarily boosting their output this year to mollify President Trump.
Oil prices have fallen in recent weeks as Saudi Arabia and Russia began boosting output, partially in response to complaints from Trump, who worried about rising prices ahead of the midterm elections, and potential damage to supply from his renewed sanctions on Iran.
Before recently raising oil output, OPEC and Russia had implemented an agreement to cut production for 18 months.
Now, the market is in an oversupply situation because of the severe reaction by Russia and the Saudis to cover for Iran losses, which did not materialize as feared.
Trump last month credited Saudi Arabia for bringing down oil prices but encouraged the Kingdom to continue pumping. The Saudis appear poised to ignore his warnings this time as the oil-dominant kingdom seeks to balance its budget.
