In a defining moment for global oil politics, Angola has declared its departure from the Organization of the Petroleum Exporting Countries (OPEC), ending its 16-year membership. This decision, which stems from a dispute over oil production quotas, is set to have significant implications for the global oil market.
Angola’s move comes in the wake of OPEC’s decision, along with its 10 allied nations, to reduce oil production in 2024, aiming to stabilize fluctuating global oil prices. However, Angola, which produces about 1.1 million barrels per day, a sizeable fraction of OPEC’s total 30 million barrels, found the terms of this decision untenable.
The announcement had a marked impact on the oil market, as evidenced by a sharp drop in Brent crude prices – a key global benchmark. Prices fell over $1 to $78.5 a barrel by 12:50 GMT, highlighting the market’s sensitivity to changes within OPEC.
Diamantino Azevedo, Angola’s Mineral Resources and Petroleum Minister, stated that the decision to exit OPEC was made in defense of Angola’s national interests. He explained that remaining in OPEC would necessitate a reduction in Angola’s oil production, contrary to its policy of preventing a decline in output and respecting existing contracts. The minister emphasized that the decision was not taken lightly.
Angola’s move must be understood against the backdrop of its status as a major oil exporter in sub-Saharan Africa, alongside Nigeria. Both countries have reportedly been unhappy with OPEC’s requests to cut production, particularly at a time when they are aiming to increase their foreign currency earnings. Angola’s economy, despite being one of the fastest-growing in the world, is highly reliant on its vast mineral and petroleum reserves, with a significant concentration of its oil wealth in the Cabinda province, known for its decades-long separatist conflict.
OPEC’s role in global oil dynamics is pivotal. The consortium, along with the expanded OPEC+ group, determines the volume of crude oil released into the world market, significantly influencing global oil prices. Following Russia’s invasion of Ukraine in February 2022, oil prices soared, reaching over $120 a barrel. They later moderated but have been on a steady rise as producers try to restrict output to support the market and in response to recent geopolitical tensions.
Angola’s departure from OPEC marks a critical juncture in the global oil landscape. Now, independent from OPEC’s production constraints, Angola confronts the challenge of navigating its oil policy amid global market volatility. This decision also raises questions about the future dynamics within OPEC and its influence on global oil prices. As the situation evolves, the broader impact of Angola’s withdrawal will become increasingly significant, particularly in terms of the global energy market and the economies of oil-producing nations.
