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Qatar Renews Commitment to OPEC Oil-Cutting Strategy

11 Jun 2017 1:54 pm
By Summer Said 

Qatar's energy minister said Sunday the country remains committed to limiting its oil output through March 2018 under an agreement with other big oil producers, despite the severing of its diplomatic relations with OPEC allies Saudi Arabia and the United Arab Emirates.

"Circumstances in the region shall not prevent the state of Qatar from honoring its international commitment of cutting its oil production," Mohammed al-Sada said in an emailed statement.

It comes after Saudi Arabia, the U.A.E., Egypt and Bahrain moved to sever ties with Qatar over accusations that the tiny Persian Gulf country has financed and harbored extremists. Qatar has denied the allegations.

Qatar, Saudi Arabia and the U.A.E. are neighbors and usually form an alliance within the Organization of the Petroleum Exporting Countries, the 14-nation cartel that controls about 40% of the world's crude-oil output.

Qatar is a small oil producer, accounting for around 2% of OPEC's output, or 618,000 barrels a day. But its rift with its OPEC allies has renewed worries that the cartel won't act together and cut enough oil supplies to raise prices.

Oil prices have fallen almost 10% since OPEC renewed its supply-cutting agreement with Russia and other non-OPEC producers last month, with U.S. prices falling to less than $46 a barrel and Brent, the international benchmark, falling to about $48 a barrel.

Oil markets have been also under pressure in part because Nigeria and Libya, who are exempt from the output cuts, were boosting production.

OPEC delegates have said that the political dispute is unlikely to weaken the supply deal. OPEC has previously managed to keep its production policies implemented even as its members fought wars through the organization's 57-year history, including the conflict between Iran and Iraq in the 1980s and Saddam Hussein's invasion of Kuwait in 1990.

Qatar has played an important role in brokering oil deals among OPEC members in the past. Mr. Sada was instrumental last year in making a production deal with Iran that wouldn't compromise the ability of Saudi Arabia and Gulf producers to fight for oil-market share, people familiar with the matter have said.

Doha also hosted the first major meeting between OPEC and non-OPEC producers in April last year, in an attempt to reach the first global supply deal in 15 years.

Write to Summer Said at summer.said@wsj.com

(END) Dow Jones Newswires

June 11, 2017 09:54 ET (13:54 GMT)

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