OPEC has recently made a surprising decision regarding one of its former members.
Seven years ago, Indonesia’s membership was suspended by OPEC membership because its oil exports were significantly lower than its imports, and the country couldn’t even fulfill the oil demands of its own population, let alone others.
What’s interesting is the fact that it’s still true, but the country has been welcomed back nonetheless.
Considering we’re talking about the Organization of Petroleum EXPORTING Countries, it’s a little awkward that they would let a net oil importer into the group.
But is it really that awkward?
Officials in Indonesia claim that the country can act as a good connector between producers and consumers. Yet, if it were that simple, OPEC would have plenty of other potential members aside from Indonesia.
What’s more likely is that OPEC is looking for easier ways to control the oil market.
After its re-initiation into OPEC, Indonesia is already looking to purchase oil from Iran, and there also may be plans to build a refinery in Saudi Arabia.
Granted, it’s true that OPEC is more than likely looking for better access to Asian markets, and Indonesia is a perfect way to bridge the gap.
Indonesia is likely to produce 850,000 bbls/d this year, or approximately 789,000 bbls/d less than it consumed last year.
Although the country had a short-lived goal of reaching one million bpd in 2014, it was quickly abandoned.
Adding Indonesia into the fold, however, will increase OPEC’s collective production target, even if by less than one million barrels per day.
So who will OPEC welcome next? The United States?
Not bloody likely.
Until next time,
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