In a major announcement, Gulf state's new energy minister Saad al-Kaabi on Monday said that Qatar is withdrawing its membership from Organisation of the Petroleum Exporting Countries (OPEC) next month.
Qatar, OPEC's 11th-largest oil member by production, shocked market watchers on Monday with the announcement it would quit OPEC, adding additional bite to proceedings ahead of a meeting scheduled for Thursday in Vienna.
In June previous year, the Saudis and other Middle Eastern countries started a boycott of Qatar, demanding, among other things, it close down the Al Jazeera news network.
Although contributing only a fraction of OPEC's overall production, Qatar's decision also throws into question the viability of the cartel.
"Qatar's decision to exit OPEC over political disagreements with allies could sour some of the bullish sentiment, though Qatar is one of the smaller Gulf oil producers", said Mike van Dulken and Artjom Hatsaturjants of Accendo Markets. Counting both its production of crude and condensate - a form of ultra-light oil - the nation pumps about 1 million barrels a day, less than a 10th of Saudi Arabia's output.
"Riyadh made a series of demands aimed at reining in its ambitious smaller neighbor, including that Qatar close down the Al Jazeera news channel", as NPR's Peter Kenyon reports.
Qatar's oil production is only around 600,000 bpd, while it is the world's biggest exporter of liquefied natural gas (LNG).
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Saudi Arabia, the United States and Russian Federation are the biggest producers in OPEC "so is it really worth it to someone like Qatar to go to Vienna to meet with someone who will lead the meeting and who is your enemy?" said Thierry Bros, a researcher with the Oxford Institute for Energy Studies.
Oil prices have fallen from a four-year high above $86 a barrel in early October on concerns over excess supply.
"In light of such efforts and plans, and in our pursuit to strengthen Qatar's position as a reliable and trustworthy energy supplier across the globe, we had to take steps to review Qatar's role and contributions on the global energy scene", al-Kaabi said. In addition to holding that job, he is also the president and CEO of Qatar Petroleum.
"We are not saying we are going to get out of the oil business but it is controlled by an organization managed by a country", said al-Kaabi. They imposed a trade and travel embargo on Qatar over allegations that it supports terrorism.
Qatar was the first country to join OPEC after the five founding nations - Iran, Iraq, Kuwait, Saudi Arabia and Venezuela - formed the group in 1960.
Kaabi announced the break with OPEC just weeks after he was appointed to the energy minister post.