Opexit? Qat-exit? Qatar’s decision to leave OPEC is symbolically important
Call it Opexit, Qat-exit or what you will, but Qatar’s departure from OPEC illustrates the oil cartel’s growing divisions. In fact, as Bloomberg Opinion’s Liam Denning has said, OPEC is now in the invidious position of needing Russia’s cooperation to maintain its sway. This is because the organisation has “inherent weaknesses” and is ill-suited to dealing with a changing world.
As Mr Denning points out, the US poses the biggest challenge to OPEC because of the shale boom even as Donald Trump continues to urge lower oil prices. This has left Saudi Arabia “in a bind” on what course to follow – it can’t raise prices without drawing Mr Trump’s ire and possibly even his support for anti-OPEC legislation in the US Congress.
In light of this, the “symbolism” of a Gulf state exiting OPEC is hard to deny. Opexit or Qat-exit matters more than one might think.