Angola, a pivotal member of the Organization of the Petroleum Exporting Countries (OPEC) since 2007, has formally communicated its decision to withdraw from the organization, citing a misalignment between its national interests and OPEC’s production quotas.
The genesis of this significant decision, confirmed by Angola’s Oil Minister Diamantino Azevedo, stems from a prolonged period of dissatisfaction with OPEC’s production quotas. Despite producing approximately 1.1 million barrels of oil per day, Angola has grappled with what it perceives as a restrictive production target set by OPEC, one that fails to reflect its capabilities and economic needs.
The rift between Angola and OPEC’s leadership, simmering for some time, escalated when Angola was asked to accept a reduced production target for 2024, acknowledging the nation’s declining production capacity. Angola’s oil output has experienced a substantial reduction, dropping approximately 40% over the past eight years due to inadequate investment in aging, deepwater oil fields.
Minister Azevedo emphasized the lack of alignment between Angola’s aspirations and the benefits derived from OPEC membership, stating, “As a country, when we participate, it is to contribute, expecting results that align with our interests. When this doesn’t occur, we become redundant, and it no longer makes sense for us to remain in the organization.” Despite efforts, including a review by external consultants, disagreements reached a tipping point when OPEC imposed a lower quota of 1.1 million barrels a day in its latest meeting, a figure below Angola’s current output.
Angola’s exit from OPEC is not merely a national decision but a significant setback for the organization, which has been striving to maintain a delicate balance in oil production to support prices. Following the earlier exits of countries like Qatar, Indonesia, and Ecuador, Angola’s departure underscores the growing challenges within OPEC in managing member countries’ diverse economic and production capacities. As of now, OPEC, headquartered in Vienna, has not issued an official comment on Angola’s decision to withdraw.
However, the organization is likely to face increased pressure to revisit its production quota policies and strategies to maintain unity among the remaining members and sustain its influence in the global oil market. Angola’s departure reduces OPEC’s membership to 12 nations, raising questions about the future cohesion and strategy of the organization. With Saudi Arabia leading OPEC and its allies in trying to control supplies to stabilize oil prices, the task may become more challenging with the exit of a key African member.
The announcement had an immediate effect on the global oil market, with Brent crude prices witnessing a noticeable dip, falling over $1 to $78.50 a barrel by 1250 GMT on the day of the announcement.
