Angola announced on Thursday that it will leave the OPEC group of oil exporters as tensions in the cartel over ongoing production cuts continue to worsen.
The latest round of cuts, which are designed to boost oil prices amid market volatility, saw the Saudi Arabia-led group lower Angola’s oil output targets despite disagreements at talks earlier this month.
Angola’s Oil Minister Diamantino Azevedo told reporters that OPEC no longer served the country’s interests, in a bow to already faltering morale within the group. It joins other mid-sized producers Ecuador and Qatar, which have both left the cartel in the last decade.
“We feel that… Angola currently gains nothing by remaining in the organisation and, in defence of its interests, decided to leave,” Azevedo said in a presidency statement.
Angola, which stands as Africa’s second-biggest oil producer after Nigeria, first joined OPEC in 2007 but has clashed with Saudi Arabia in recent meetings over relentless efforts to cut member nations’ production baselines. Serious tensions between the two countries began in June when representatives for Angola walked out of OPEC talks.
Helima Croft, a former CIA analyst and head of commodities research at RBC Capital Markets, told the Financial Times: “The seeds of this exit were laid in June… Angola has been one of the moodier members, having staged multiple meeting walkouts in recent years at the secretariat.”
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She added that while the departure is a blow to OPEC, it will not have a significant impact on the group’s ability to influence the market.
Brent crude, the global benchmark for oil prices, fell 1.8% to $78.26 per barrel on Thursday, with the US benchmark West Texas Intermediate dropping 2.1% to $72.69 per barrel.
Uncertainty over a lack of concrete commitments from member nations to further cuts has exacerbated an already anxious market environment.
Scepticism from traders over the effectiveness of OPEC’s continued cuts as a method of boosting oil prices have also begun to seep into the market. OPEC+ began voluntary production cuts more than one year ago but has so far seen little tangible effect on global crude prices.
Raad Alkadiri of political risk consultancy Eurasia Group said earlier this month: “The market is going to test OPEC+ and whether $80 a barrel is really a floor they can defend… The cuts being billed as ‘voluntary’ undermines the psychological impact for the market a little, but if the full cut is realised, its impact on the market should not be discounted.”
Ongoing geopolitical tensions in the Middle East, exacerbated by the recent war in Palestine, have caused further market volatility. At the end of October 2023, the World Bank warned that oil prices could soar as high as $150 per barrel in 2024 if the war was to escalate into a regional conflict.