Angola Leaves OPEC After 16 Years in the Cartel.

Angola announced today that it will leave the Organization of the Petroleum Exporting Countries ( OPEC ) cartel due to a disagreement over production quotas. The decision follows last month's decision by 13 members and 10 allied nations of the cartel to further reduce oil production in 2024 to support volatile global prices.

Angola joined OPEC in 2007 and currently produces around 1,1 million barrels per day, out of the 30 million for the entire OPEC group. Following the exit announcement, oil prices fell, with Brent dropping more than $1 to $78,5 per barrel at 12:50 GMT today.

Angola's Decision

Angola's decision to leave OPEC was taken this Thursday at the regular cabinet meeting.

“We believe that at this moment Angola has nothing to gain by remaining in the organization and, in defense of its interests, it decided to leave”.

“If we remained in OPEC… Angola would be forced to reduce production and this goes against our policy of avoiding declines and respecting contracts”.

The Minister of Mineral Resources, Petroleum and Gas, Diamantino Azevedo , stated this, adding that the decision was not taken lightly.

The reasons

OPEC is a group of global oil producers that, together with the expanded group called OPEC+, decides how much crude oil should be sold on the international market.

Angola and Nigeria are the two largest oil exporters in sub-Saharan Africa. Both countries were very unhappy about being asked to reduce production at a time when they needed to increase their foreign currency earnings.

Angola has vast mineral and oil reserves, and its economy is one of the fastest growing in the world – however, economic growth is highly uneven. Much of its oil wealth resides in the Enclave of Cabinda, where a separatist conflict has persisted for decades.

Angola – which was a member of OPEC for 16 years – is not the first country to abandon the cartel. Ecuador, Indonesia and Qatar have also done so. This move is seen as a blow to OPEC unity, being considered by some experts to be more symbolic of the real thing, without having a substantial impact on global oil dynamics.

After the start of the Ukraine war in February 2022, oil prices soared, reaching more than $120 per barrel in June last year. They fell to around $70 a barrel in May this year – but have risen steadily since then, as producers try to restrict production to support the market and following recent attacks on cargo ships in the Red Sea.

Conclusion

Angola's decision to leave OPEC due to disagreements over production quotas reflects tensions between members and allied nations over strategies to stabilize oil prices and the particular interests of each member.

This movement, influenced by the desire to preserve production and respect contracts, brings to light the significant economic implications for Angola and the need to address issues of sustainability and environmental management in the exploitation of its natural resources.

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Picture: © DR