Angola is leaving OPEC due to a dispute over oil production

In a sign of ongoing tensions between oil producers, Angola said on Thursday it would leave OPEC. The decision was made during a cabinet meeting chaired by state-owned company President Joao Lourenco Jornal de Angola reported.

Angola’s announcement was not surprising. The country’s leaders have been seething since Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, orchestrated a move last June to cut the oil production quotas of Angola, Nigeria and other countries, while raising the ceiling for the United States. increased. Arab Emirates.

“Angola has never reconciled itself to the deal that allowed the UAE to grow by 2024 at the expense of underperforming African producers,” Helima Croft, head of global commodities at research firm RBC Capital Markets, said in an email. Ms Croft said Angola was “one of the more moody members, having organized strikes at meetings several times in recent years.”

Angola’s decision to leave OPEC is an indication of how the current dynamics of the oil industry are putting pressure on some producers. Angola, once one of the most promising oil countries, has seen its production fall by almost 40 percent over the past eight years as belt-tightening international oil companies no longer find it an attractive destination for investment given the aging of its oil fields. Nigerian production has fallen for similar reasons.

When Saudi Oil Minister Prince Abdulaziz bin Salman pushed these countries to accept lower quotas in June, he tried to bring the ceilings in line with actual production capacity. However, from Angola’s perspective, a lower ceiling would deter investments that Mr. Lourenco is trying to attract, so there was no point in staying with the cartel.

“We realized that Angola is not gaining anything at this point by staying with the organization,” said Diamantino de Azevedo, Angolan Minister of Minerals.

The Saudis tried to mollify Angola and other African producers by hiring consultants to assess their production capabilities. The results, announced after OPEC’s most recent meeting in November, yielded an even lower quota of 1.11 million barrels per day for Angola, a reduction of around 25 percent from the previous quota. Angolan officials said at the time that they would ignore the ceiling.

Nigeria, which received an upward revision in November, appears likely to stay in the group, analysts say. OPEC had no immediate comment Thursday. News of Angola’s departure, which brings the number of countries in OPEC to 12, led to oil prices falling 2 percent before recovering. Although analysts said the announcement was unlikely to herald an immediate split from the group, Angola’s departure highlights the unenviable task the Saudis have chosen for themselves.

Non-OPEC production, especially from the United States, is rising, but the Saudis are trying to prop up oil prices with what seems like an endless series of production cuts. At the November meeting, a group of countries including Iraq, the Emirates and Kuwait all agreed to new cuts. In countries where oil revenues are essential to government budgets, more frustration over OPEC’s cuts may surface.

“Angola’s departure reflects the dissatisfaction of other members of the group over the use of a quota that they believe limits their growth,” said Robert McNally, founder of research firm Rapidan Energy Group.

Gilberto Neto contributed reporting from Luanda, Angola.