MOSCOW, Jun 5 (PRIME) -- Russia’s Energy Ministry intends to discuss the severance of diplomatic relations with Qatar by Bahrain, Saudi Arabia, Egypt and the United Arab Emirates (UAE) at a meeting of the OPEC+ committee to monitor implementation of an oil output cut agreement in July in Moscow, a source with knowledge of the matter told PRIME on Monday.
Qatar is accused of backing terrorist organizations and disrupting the states’ national security. Both U.A.E. and Qatar are participants of an OPEC and non-OPEC deal to reduce oil production.
OPEC states agreed to reduce their oil production by 1.2 million barrels daily to 32.5 million barrels in November 2016. Russia joined the agreement in December with a promise to cut output by 300,000 barrels daily compared with the level of October 2016. The agreement was concluded for January–June and was prolonged for nine more months in May.
A source in the Russian government familiar with the matter said that the situation does not seem to undermine an oil output reduction deal so far.
“It is premature to talk about a threat. Iran and Saudi Arabia have broken ties long ago, but they comply with the agreement,” the source said.
Sberbank CIB analyst Valery Nesterov agreed that the situation is unlikely to hurt the OPEC+ deal.
“From the point of view of the agreement to cut oil production (the case) is unlikely to influence it much. First, unfriendly countries have already participated in it. Political tensions are an old story in OPEC and they can be very bad,” he said.
The analyst also added that Qatar is mainly a liquefied natural gas exporter and a minor player on the oil market so even if the state leaves the agreement, it will not hurt the deal much.
Nesterov also said that the events are a serious driver for the oil price growth.
“Another trouble spot is, to my mind, a serious driver, which will support the prices or push them up… The situation is likely to be positive for the oil market. Each center of tension in the Middle East results in a speculative growth in crude prices,” the expert said.
The Brent oil price has risen 0.98% to U.S. $50.44 per barrel as of 10:01 Moscow time.
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