The dispute over crude oil production quota between the Organisation of Petroleum Countries and a few of its members has eventually led made Angola to exit the global oil cartel, leading a decline in global crude oil prices on Thursday.
On November 29, 2023, it was reported that Nigeria and Angola opposed a reduction in their crude oil production quotas by OPEC.
Bloomberg had reported at the time that OPEC was no closer to resolving the deadlock over oil production quotas for some African members that had already forced the group to delay a critical meeting amid faltering prices, quoting delegates.
The report stated that the Saudi-led alliance had not been able to reach an agreement with Angola and Nigeria, which were pushing back against lower quota limits for 2024 that reflect their diminished production capabilities, delegates told Bloomberg, asking not to be named because the information was private.
On Thursday, Angola Press Agency reported that the country’s Minister of Oil, Diamantino de Azevedo, announced that Angola had decided to halt its membership of OPEC.
Azevedo told the press that the decision was made during a council of ministers’ session, which was chaired by Angolan President, João Lourenço.
“We feel that at the moment Angola does not gain anything by remaining in the organisation and, in defence of its interests, it has decided to leave,” Azevedo reportedly stated.
The exit of Angola from OPEC affected the cost of crude negatively on Thursday, as Brent, the global benchmark for oil, dropped by 1.49 per cent to $78.49 a barrel, while US West Texas Intermediate declined by 1.44 per cent to $73.15 a barrel.
In November, OPEC and its allies, known as OPEC+, reduced Angola’s oil production target for 2024 to 1.11 million barrels per day. Prior to the reduction, there was an agreement in June that Angola could produce 1.28 million bpd — pending assessments by consultancies.
Reports have it that earlier this month, Angola sent a note of protest to OPEC over the decision. Bloomberg reported that delegates at the OPEC meeting had blamed disagreements on Africa’s oil output for the postponement of the alliance’s last meeting on November 25-26.
The meeting was later held on November 30, with OPEC saying Nigeria could achieve an oil production quota of 1.5 million barrels of crude oil per day in 2024 and Angola 1.11 million bpd.
The meeting also welcomed Alexandre Silveira de Oliveira, Minister of Mines and Energy of Brazil, ahead of the country’s admittance to OPEC+ charter of cooperation in January 2024.
Although Nigeria’s oil output excluding condensates revolves below 1.3 million barrels per day, lower than the 1.5mbpd production approved for the country by OPEC in 2024, the Minister of State for Petroleum (Oil), Senator Heineken Lokpobiri, recently said the country would meet and surpass its OPEC quota.
It was observed that oil prices reacted negatively following the exit of Angola from OPEC, as the price of the main international and United States crude dropped more than 1.5 per cent.
Recall that in an effort to prop up prices, the OPEC+ alliance had implemented supply cuts of more than five million barrels per day since the end of 2022.
But oil prices still slid to their lowest levels in nearly six months following the latest OPEC+ decision. The US has been pumping at record rates, as have Brazil and Guyana, while the weak global economy has raised concerns about demand.
ActivTrades analyst, Ricardo Evangelista, according to AFP, said the departure of Angola, a relatively small producer at 1.1 million barrel per day, would hurt OPEC less than if it had been a big producer such as Iraq.
But the timing could not be worse “when the cartel is working hard to convince its members to voluntarily reduce production in order to support prices,” Evangelista said.
By Okechukwu Nnodim
