Angola announced that after 16 years of membership, it has decided to leave the Organization of the Petroleum Exporting Countries — raising concerns over the group’s weakening influence on the oil market.
“Angola had no clout, no authority among OPEC circles and was tired of being told what to do,” said Manish Raj, managing director at Velandera Energy Partners, a privately held, U.S.-based exploration and production company.
“Its exit from OPEC symbolizes its frustration and clash of personalities, rather than economics,” he said.
Diamantino de Azevedo, Angola’s oil minister, announced the withdrawal of Angola from OPEC on Thursday, according to state-controlled news agency Angop.
“We feel that at the moment Angola does not gain anything by remaining in the organization and, in defense of its interests, it has decided to leave,” he said, according to the news agency, which reported that the decision had already been “transformed into a decree law” and signed by Angola President João Lourenço.
Angola’s output
The decision has “definitely surprised the [oil] market,” Matt Smith, lead analyst, Americas, at Kpler told MarketWatch.
Even though Angola isn’t a large producer within the group, its decision to leave OPEC appears to be “a reflection of the unity and harmony within the group — or the lack thereof,” he said. “Angola’s participation within OPEC has little upside. Its production is in gradual structural decline, but it is still expected to participate in production cuts while having little influence on decision-making.”
In 2021, Angola’s crude-oil production was at 1.137 million barrels a day, with exports at 1.085 million barrels a day, according to data from OPEC. It joined OPEC in 2007.
Angola produced 1.130 million barrels a day in November, down 37,000 barrels a day from October, OPEC’s December oil report shows, with data based on based on secondary sources. Total OPEC oil production was at 27.837 million barrels a day in November.
Angola’s 2024 output target, according to OPEC, would have been 1.11 million bpd.
Raj said “Angola has no spare capacity and can’t even produce to its allocated quota.” He said the country’s departure from OPEC “will make exactly zero impact to global oil supply.”
“Angola’s production has been declining for over a decade, with present production being well below its decade-old level,” said Raj.
Still, the “money question is — who will be the next to leave?” he said. “If other dissatisfied members leave, like Qatar did in 2018 and Angola is doing now, then OPEC will be left with a shrinking base of producers.”
““If other dissatisfied members leave, like Qatar did in 2018 and Angola is doing now, then OPEC will be left with a shrinking base of producers.””
Member changes
Tyler Richey, co-editor at Sevens Report Research, however, pointed out that Brazil is set to join OPEC+, made up of OPEC and its allies, including Russia, in January. While no formal production cuts by Brazil have been announced, the country produces three times more oil than Angola.
“For OPEC+, the outcome of losing Angola and gaining Brazil is positive for the group, as they gained a net of 2 million barrels per day in collective global production capacity,” said Richey. Brazil produced 3.021 million bpd of oil in 2022, according to the International Trade Administration.
The move follows the Nov. 30 OPEC+ meeting. The group of major oil producers had agreed to voluntary oil production cuts that would total more than 2 million barrels a day, including an extension of a 1 million bpd reduction by Saudi Arabia, starting in January.
The meeting itself, however, had been postponed by four days, as members struggled to reach an agreement over output cuts.
“I don’t think the resignation of Angola is a market-making event,” said Tom Kloza, global head of energy analysis at OPIS, a Dow Jones company, “but it does remind people that cohesion within OPEC+ is not particularly strong.”
Price moves
The news that Angola is leaving OPEC was blamed for oil’s price retreat Thursday, “when in reality the market was a bit overbought since various bottoms were hit last Wednesday,” Kloza told MarketWatch.
Oil prices marked a third straight session climb on Wednesday, finding support in the wake of moves by major shipping companies to halt shipments through the Red Sea after attacks on vessels by Iran-backed Houthi rebels.
In Thursday dealings, U.S. benchmark West Texas Intermediate crude saw its February contract
CLG24,
CL.1,
fall by 91 cents, or 1.2%, to $73.31 a barrel on the New York Mercantile Exchange.
Global benchmark Brent crude for February delivery
BRNG24,
BRN00,
traded at $78.77 a barrel on ICE Futures Europe, down 93 cents, or 1.2%.
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