Reuters, ‘OPEC fails to agree production ceiling after Iran pledges output boost’, 04 Dec 2015 (emphasis added):

OPEC members failed to agree an oil production ceiling on Friday at a meeting that ended in acrimony, after Iran said it would not consider any production curbs until it restores output scaled back for years under Western sanctions.

Friday’s developments set up the fractious cartel for more price wars in an already heavily oversupplied market.

Oil prices have more than halved over the past 18 months to a fraction of what most OPEC members need to balance their budgets. Brent oil futures fell by 1 percent on Friday to trade around $43, only a few dollars off a six year low.

Banks such as Goldman Sachs predict they could fall further to as low as $20 per barrel as the world produces more oil than it consumes and runs out of capacity to store the excess.

A final OPEC statement was issued with no mention of a new production ceiling. The last time OPEC failed to reach a deal was in 2011 when Saudi Arabia was pushing the group to increase output to avoid a price spike amid a Libyan uprising.

“We have no decision, no number,” Iranian oil minister Bijan Zangeneh told reporters after the meeting.

OPEC’s secretary general Abdullah al-Badri said OPEC could not agree on any figures because it could not predict how much oil Iran would add to the market next year, as sanctions are withdrawn under a deal reached six months ago with world powers over its nuclear program.

Most ministers left the meeting without making comments.

Badri tried to lessen the embarrassment by saying OPEC was as strong as ever, only to hear an outburst of laughter from reporters and analysts in the conference room.

This is of course an absolutely fantastic development which is part of the reason why securing the Iran nuclear deal was so incredibly important.

Some quick bullet point observations on what this means for the world:

• The OPEC countries will have to keep pumping oil in order to maintain their market share in a vain attempt to prevent Iran from taking it.
• In such a scenario, oil prices fall significantly because of the glut of oil on the market.
• State budgets of oil-producing countries who have not significantly diversified their economies are damaged significantly, sending them possibly into recession and curtailing their geopolitical influence. These include countries like Russia, as well as Saudi Arabia and other Arab Gulf countries that we can enjoy laughing at.
• The price floor could end up being as low as USD $10 a barrel (WTI) if this keeps up.
• The price ceiling would also be constricted to around USD $50 a barrel (WTI) as the shale producers who are pummelled by the fall in price (at lower prices shale production is non-viable) either optimise their processes or merge with other enterprises that enable them to have the kind of alternate revenue streams that allow them to ‘park’ their shale operations when the price is low and reactivate them when it reaches $50. By this mechanism, a price ceiling is created.
• All oil-purchasing economies benefit from these developments. The European Union benefits, and also most East Asian economies benefit enormously.
• In the case of the poorest East Asian states, the fall in oil prices allows those states the ability to carry out internal adjustments that will enable them to expand welfare provisions, optimise food production, and upgrade hospitals and schools in ways that have needed to be done for a long time.
• The European Union will be able to diversify its energy supply, thus preventing it from being so easily held hostage to Russian geopolitical demands.

If you’re thinking that this sounds like fun, it’s because it is definitely fun.