The Secretary General of OPEC, Abdalla El-Badri couldn’t have put it any better in Vienna today, ‘there are genuine demand uncertainties’. To prevent further ‘demand destruction’, OPEC has decided to keep official quotas unchanged at 30mb/d. Non-official output is of course far higher at 31.85mb/d, and when we say OPEC, what we really mean, is Saudi Arabia: Riyadh is now in a totally dominant position to call all the volume and pricing shots across the cartel. The Vienna meetings tell us as much.

OPEC hawks certainly seem to get this. Instead of forcing a quotas show down to announce official cuts, they’re all hoping that Saudi Arabia will discretely rein in production back towards official quota levels when they jet out of Schwechat airport tomorrow. But the key question they all have is how far and how fast will Saudi Arabia go?

Given this is the first time OPEC has failed to officially cut outpt in a decade when price corrections have exceeded 10%, ongoing Eurozone paralysis, US debt debris and Chinese stimulatory caution is likely to see the cartel having to face a sustained period of Brent trading significantly below $100/b.

via Riyadh’s OPEC Whip Risks Russian Backlash – Forbes.