Indonesia’s Reentry into OPEC Complicated Production Cut

Seven years after it suspended its membership, the Southeast Asian country had asked OPEC earlier this year to reactivate its membership as the country aims to benefit from closer ties with oil producers.

Although the country produces just about 850,000 barrels of oil a day—half of what it consumes and a fraction of the 30 million barrels a day that OPEC members collectively pump—its entry as the 13th member into the group means its output will have to be factored into group’s production ceiling.

Friday’s semi-annual meeting is being closely eyed given the recent sharp in oil prices, which are currently hovering near six-year lows.

In fact, with the entry of Indonesia, OPEC may even have the “perfect excuse” to lift total oil production ceiling, said Barnabas Gan, an analyst at OCBC in Singapore who is projecting a supply hike to 31-33 million barrels a day after Friday’s meeting.

via CNBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza