The biggest group of oil-producing countries on the planet are losing Qatar, in a move that is set to affect oil and petrol prices worldwide.
Organization of the Petroleum Exporting Countries (OPEC) is made up of 57 oil-rich countries who control a vast majority of the world’s supply. However, they’re about to become one member light, as Qatar have confirmed they are pulling out of the organisation – a decision that could see petrol prices rise in South Africa.
The news was confirmed by Qatari Energy Minister, Saad al-Kaabi. He denied the move was linked to political tensions between the Gulf State and Saudi Arabia – the de facto leader of OPEC – but insisted it was a choice based on rationality.
Why Qatar have left OPEC
Despite having an abundance of oil, Qatar itself is a very small country. The fact they are hosting a soccer World Cup in four years’ time is nothing short of bizarre, but money talks. Their relative size means that they don’t contribute as much to OPEC as many other 56 members.
For example, Russia tops the table with 11 million barrels of oil produced everyday. Qatar produces around 600 000 barrels on a daily basis, accounting for just over 5% of what Putin and co can contribute.
There’s also been a shift in the way energy exports are shared from Qatar. They’ve switched focus to liquid gas production, becoming the biggest reserve in the world for liquefied natural gas (LNG). With these factors together, the nation is cutting ties with OPEC.
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How petrol prices in South Africa will be affected
But what does this mean for South Africa? Well, despite Qatar producing a tiny amount of the world’s oil supply, it’s still a move that will not be welcome in Mzansi. The change in policy comes at a time where Russia have promised to limit the amount of oil their supplying by about 30%.
This double-header has already given the crude oil market a bit of impetus: The price of a barrel of oil has risen 5% since the weekend, and is expected to climb even further when OPEC meet to discuss these changes on Wednesday (yesterday). When the international price of oil goes up, that usually means South African petrol prices rise.
As Eric Knecht writes for Reuters, the decision reached by the US and China to suspend their trade war has also boosted oil prices:
“Oil prices surged about 5% on Monday after the United States and China agreed to a 90-day truce in their trade war, but Brent crude is still trading at around $62 a barrel, well below October’s peak of more than $86.”
The upheaval will not affect the petrol prices set out for December in Mzansi, though. Motorists were jumping for joy when a R1.84-per-litre decrease was announced, coming into effect on Wednesday. However, these lower prices may not be here to stay next year.
This news release does not necessarily reflect the opinion of SA-news.
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