Output quota hits 31.5 million barrels per day from 30.0 mbpd
The quota hike is being spun as 'matching actual production' and some newswires confused the spin with the reality that the quota went up.
None of this means anything for actual production but it shows that OPEC doesn't really care to jawbone or cares about the optics. It shows they're more committed than ever to flooding the market with cheap oil.
WTI oil was trading at $41.80 ahead of the decision and has slipped below $40 now. Brent has also fallen more than $1.
This is what a war for market share looks like
The reality is that eve at 31.5 million barrels per day, OPEC is already overproducing. Surveys show around 32.0 million barrels per day of production most months. In Nov, Reuters had it at 31.74 mbpd.
The other news is that Indonesia has joined OPEC after sitting on the sidelines for 7 years. That's a non-factor for prices but it confused the market momentarily because some thought the new quota included Indonesia. Bloomberg is reporting that the 31.5 mbpd figure doesn't include Indonesia, citing sources.
The official decision isn't out yet.
Iran is the x-factor for oil prices. Officials there say they will increase exports by 500k barrels per day in early January and another 500k bpd shortly afterwards. In a world awash in oil with storage at near-capacity, there's nowhere for that to go.
