As the Vienna OPEC ministerial meeting continues to grab the headlines, the latest source reports indicate that Indonesia has been suspended from OPEC.
At this stage, there are no reasons given for the suspension and no official confirmation of the action. The sources also suggest that Indonesia’s market share will be shared among some other OPEC members. Indonesia’s production is around 0.75mn bpd and a distribution of the quota among other members would make it easier to reach the new production targets for other members as well as OPEC as a whole.
Such a manoeuvre would, however, significantly devalue the overall deal to cut production by 1.2mn bpd as there would be much less in the way of an actual cut from the remaining OPEC members if Indonesia is excluded from the total.
The latest source reports also suggest that the Iranian output ceiling will be 3.797mn bpd with Saudi Arabia’s quota at 10.06mn bpd.
In very volatile conditions, January WTI retreated back towards $48.20 p/b from highs above $48.80 following the Indonesia reports.