Angola, a significant oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC) for 16 years, has announced its departure from the oil producers’ organization. This decision comes in the wake of a disagreement over output quotas within the cartel. The move follows OPEC’s recent decision, along with its 10 allied nations, to further cut oil production in 2024 to stabilize the global oil market amidst fluctuating prices.
Currently contributing approximately 1.1 million barrels per day out of OPEC’s total production of 30 million barrels, Angola plays a notable role in the global oil market. The decision to exit OPEC has already led to a decline in oil prices, with Brent prices falling over $1 to $78.5 a barrel shortly after the announcement.
Angola’s withdrawal from OPEC was officially declared during a cabinet meeting, with Mineral Resources and Petroleum Minister Diamantino Azevedo explaining the rationale behind the decision. Minister Azevedo emphasized that remaining in OPEC would require Angola to reduce its oil production, a move that contradicts the country’s policy of avoiding production declines and respecting contractual agreements. The decision, according to the minister, was made in defense of Angola’s interests and was not taken lightly.
Angola and Nigeria, the two largest oil exporters in sub-Saharan Africa, have expressed dissatisfaction with OPEC’s requests to reduce production. Both nations find themselves in a challenging position, needing to increase foreign currency earnings while simultaneously being asked to cut production. Angola, despite its vast mineral and petroleum reserves and being among the world’s fastest-growing economies, faces economic disparities. The majority of its oil wealth is concentrated in Cabinda province, where a longstanding separatist conflict continues.
Angola joins a list of countries that have opted to leave OPEC in the past, including Ecuador, Indonesia, and Qatar. OPEC, originally formed as a coalition of oil-producing nations determining global crude oil sales, has evolved with the inclusion of an expanded group known as OPEC+. This latest departure underscores the ongoing challenges and tensions within the organization.
The backdrop to Angola’s exit is the fluctuating dynamics of the global oil market. Following Russia’s invasion of Ukraine in February 2022, oil prices soared to over $120 a barrel in June of the same year. Although prices retreated to just above $70 a barrel in May, they have steadily risen due to concerted efforts by producers to limit output and recent attacks on cargo vessels in the Red Sea.
Angola’s departure from OPEC adds a new layer of complexity to the ever-evolving landscape of global oil dynamics. As OPEC and its allies continue to navigate challenges, the repercussions of Angola’s decision will reverberate through the energy markets, influencing prices and production strategies. The ongoing balance between stabilizing the market and meeting individual nations’ economic needs remains a delicate task for the oil-producing nations on the world stage.
