Angola Decides to Exit OPEC, Citing Its Own Interests
Angola has announced its decision to leave the Organization of the Petroleum Exporting Countries (OPEC), dealing a blow to the Saudi-led oil producer group’s efforts to stabilize oil prices through output cuts. Angola’s Oil Minister, Diamantino Azevedo, stated that the country no longer benefits from its OPEC membership and, in the interest of defending its own needs, has chosen to withdraw. The departure of Angola has sparked concerns about the unity of OPEC and its wider coalition, OPEC+, which includes Russia and other allied nations. This development caused a decline of up to 2.4% in international oil prices on Thursday. However, experts believe that Angola’s exit is not indicative of similar intentions by other influential members of the alliance.
Dissension within OPEC over Output Quota Cut Decision
Angola’s decision to leave OPEC comes after the country expressed dissatisfaction with OPEC+’s choice to reduce its output quota for 2024. Analysts note that this demonstrates a lack of consensus within OPEC itself, a situation that has been apparent for some time. While Angola did receive a higher output target for 2024 than initially proposed, it was still lower than what Angola had hoped for. This limited Angola’s ability to increase production should conditions allow for it. OPEC has not yet issued any formal response to Angola’s departure.
Surprise and Impact of Angola’s Departure
The news of Angola’s exit from OPEC took many by surprise. Three OPEC delegates, speaking anonymously, stated that they expected the dispute over Angola’s output quota to subside without such drastic action. Angola, which has been an OPEC member since 2007, currently produces approximately 1.1 million barrels of oil per day, a small fraction compared to the whole group’s output of 28 million barrels per day. With Angola’s departure, OPEC will now consist of 12 member nations, collectively producing around 27 million barrels per day, which accounts for about 27% of the global oil market. This reduces OPEC’s market share even further from its 34% share in 2010.
Market Share Challenges and Angola’s Struggles
OPEC has been facing challenges in maintaining its market share due to the departure of certain members, production cuts, and the increasing output of non-OPEC countries, particularly the United States. In January, Brazil is expected to join OPEC+, but without participating in the coordinated output caps. Angola has faced difficulties in meeting its OPEC+ quota due to declining investments and a lack of significant new oilfield developments. Since reaching its peak production of 2 million barrels per day in 2008, Angola has struggled to reverse the decline. The country now anticipates maintaining its current production levels until 2024. Angola’s economy heavily relies on oil and gas, which account for approximately 90% of its total exports. The government has been actively seeking to reduce this over-reliance, particularly after the adverse effects of the COVID-19 pandemic and the resulting drop in global fuel prices. Notable international companies operating in Angola include TotalEnergies, Chevron, ExxonMobil, and Azule Energy, a joint venture between Eni and BP.