"For me to put efforts and resources and time in an organization that we are a very small player in and I don't have a say in what happens ... practically it does not work, so for us, it's better to focus on our big growth potential." This statement by Qatar’s Minister of State for energy Affairs Saad al-Kaabi perhaps is the most eloquent explanation for the Qatari decision to quit the Organisation of the Petroleum Exporting Countries (OPEC). Qatar may not be a major oil exporter but as the minister observed, “We are not saying we are getting out of the oil business … But it is controlled by an organization managed by a country.”
Clearly, the Qatari move has a broader frame of geopolitics. Qatar is not dependent on oil revenues to finance its budget. As the leading LNG exporter, Qatar draws its fiscal strength from natural gas. The global oil prices are not so critical for Qatar, and moreover, estimates are that Qatar is comfortable at oil prices at US$44.5 while Saudi needs oil price to be US$77.9 per barrel. Surely it was like to maximize gain, but it would not be wary of oil prices going down which has been the reason for the recent embrace of the Saudi Prince and president Vladimir Putin to embrace each other. The power projection of both Russia and Saudi critically hinges on the oil price and their projection as controllers of oil price regime. The fact that they boldly declared their decision unilaterally before the OPEC meeting demonstrate that OPEC as collective is ignored. It is significant to note that Qatar played an active role in bringing OPEC and non-OPEC together in 2016.
The realignment of power dynamics in energy sector triggered by so-called shell revolution and President Donald Trump’s decision to re-impose sanction on Iran is creating compelling grounds for oil exporters to reposition themselves beyond the discipline or compliance of OPEC decisions. Despite their divergent views on Syria and Iran, Russia and Saudi Arabia are synergizing their approach on oil regime. Likewise, the US is endorsing the Saudi animosity to Iran but is not agreeable to cut the oil output. And for its part, despite its tiny stature, Qatar enjoys strategic salience due to its security ties with Washington.
The Qatari moves send a signal to Saudi Crown Prince MBS as well as President Trump, and it can be argued that Saudi boycott has made Qatar a more visible and engaged with extra-regional players like Turkey or Iran. It can spoil the Saudi moves from the margin, no wonder the King of Saudi Arabia has invited Emir of Qatar to GCC summit to be held on 9th of December. Though MBS has done good public relation excises in the recent G-20 summit in Buenos Aires, the shadow of Khashoggi episode continues to loom large on the kingdom, a state claims to be the custodian of ethical values of Islam.
Indeed the Kingdom is facing an erosion of power which oil alone cannot replenish. On the contrary, if Qatar goes to the GCC summit, it will be with a sense of strength. Indeed, Qatar’s exit from OPEC and return to GCC does suggest that the US continues to be the scriptwriter in the dynamics of the Persian Gulf.
As part of its editorial policy, the MEI@ND standardizes spelling and date formats to make the text uniformly accessible and stylistically consistent. The views expressed here are those of the author and do not necessarily reflect the views/positions of the MEI@ND. Editor, MEI@ND: P R Kumaraswamy
Girijesh Pant is a National Fellow of Indian Council of Social Science Research (ICSSR) at Symbiosis International University Pune. Formerly, he was Dean of the School of International Studies at JNU and has served as Vice-Chancellor at Doon University, Uttarakhand and GGD University at Bilaspur. He is also associated with higher academic bodies like the University Grant Commission, ICSSR, Indian Council of World Affairs, etc. He has recently been appointed as Member, Academic Committee of the School of International and Area Studies, Tsinghua University. China. His academic interest includes development studies with a focus on India and West Asia; political economy of Gulf countries; political economy of international energy; India’s energy security and energy relations, India’s economic relations with GCC countries. Awarded Lifetime Achievement Award by Venkateshwara University Tirupati, he has been Senior Fulbright Visiting Scholar, University of Illinois, IL. He has travelled widely and participated and contributed papers in several national and international conferences, journals and books. Presently he is working on energy transition concerning India.