Angola to quit OPEC in oil production dispute
LONDON — In a sign of lingering tensions among oil producers, Angola said Thursday that the country would be leaving OPEC. The decision was made at a Cabinet meeting led by President Joao Lourenco, the state-owned Jornal de Angola reported.
Angola’s announcement was not surprising. The country’s leaders have been seething ever since Saudi Arabia, OPEC’s de facto leader, orchestrated a move last June to reduce the oil output quotas of Angola, Nigeria and other countries, while increasing the ceiling for the United Arab Emirates.
“Angola never reconciled to the deal that enabled the UAE to increase for 2024 at the expense of the underperforming African producers,” said Helima Croft, head of global commodities at RBC Capital Markets, a research firm, in an email. Croft said that Angola had been “one of the moodier members, having staged multiple meeting walkouts in recent years.”
Angola’s decision to leave OPEC is an indication of how the current dynamics of the oil industry are squeezing some producers. Once one of the more promising oil countries, Angola has seen its output plummet nearly 40% in the last eight years as international oil companies tightening their belts no longer found it an attractive destination for investment, given the aging of its oil fields. Nigeria’s production has fallen for similar reasons.
When the Saudi oil minister, Prince Abdulaziz bin Salman, pushed these countries in June to accept lower quotas, he was trying to bring the ceilings in line with actual production capacity. From Angola’s point of view, though, a lower ceiling would deter investment that Lourenco has been trying to attract, and so there was no point in staying in the cartel.
The Saudis tried to mollify Angola and other African producers by agreeing to hire consultants to review their production capabilities. The results, announced after OPEC’s most recent meeting in November, produced an even lower 1.11 million barrel-a-day quota for Angola, a cut of about 25% from its previous quota. Angolan officials said at the time that they would ignore the ceiling.
While analysts said the announcement was unlikely to herald any immediate fracturing of the group, Angola’s leaving highlights the unenviable task the Saudis have chosen for themselves.
Production outside OPEC, especially from the United States, is surging, but the Saudis are trying to support oil prices with what seems like an endless series of production restraints. At the November meeting, a group of countries including, Iraq, the UAE and Kuwait, all agreed to new cuts. In countries where oil revenue is essential for government budgets, more frustration with OPEC’s cuts may surface.
“Angola’s departure does reflect disgruntlement by other members of the group about carrying a quota they feel constrains their growth,” said Robert McNally, founder of Rapidan Energy Group, a research firm.