As expected, OPEC’s decision to stick to its ‘high’ production levels in its December 4th meeting in Vienna didn’t go down well with the markets as oil prices plunged after the announcement.
It is also quite evident that there is now a growing resentment within OPEC as members like Venezuela, Libya, Algeria and Angola were hoping for a production cut, which could have helped their ailing economies.
But in another interesting development, OPEC announced the re-entry of Indonesia into the oil cartel. Many experts consider this to be an unusual move as Indonesia is a net importer of oil and consumes almost double of what it produces, much unlike any other OPEC members. In fact, Indonesia’s OPEC membership had come to an end in the year 2009 when its crude oil imports far exceeded its crude oil exports. So why was OPEC, which is dominated by the likes of oil exporters such as Saudi Arabia and UAE, so keen to reinstate a member that prefers the oil price to remain low?