Angola exits OPEC over geopolitical favoritism

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Angola is leaving the Organization of the Petroleum Exporting Countries (OPEC) because membership is not serving its interests, oil minister Diamantino Azevedo said on Thursday.

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Angola, which joined OPEC in 2007, produces about 1.1 million barrels of oil per day, compared with 28 million bpd for the whole group.

Confirming an earlier report by local news agency ANGOP, Azevedo told public television the decision to leave was because OPEC membership was not serving Angola’s interests, but did not give further details.

Oil prices extended losses on the news, with Brent prices down over $1 to $78.50 a barrel by 1250 GMT.

Angola’s exit is a setback for OPEC and its allies, just as the group tries to get members to cut output to support prices.

Last month, Azevedo’s office protested a decision by OPEC to cut its production quota for 2024. Bloomberg also quoted Angola’s OPEC Governor Estevao Pedro as saying the country was unhappy with its 2024 target and did not plan to stick to it.

Disagreements over African output quotas had earlier helped delay a meeting of the wider OPEC+ oil producer group.

Reactions to Angola’s decision to leave OPEC

GIOVANNI STAUNAVO, UBS:

“From an oil market supply perspective, the impact is minimal as oil production in Angola was on a downward trend and higher production would first require higher investments.

“However, prices still fell on concern of the unity of OPEC+ as a group, but there is no indication that more heavyweights within the alliance intend to follow the path of Angola.”

JAMES DAVIS, FGE:
“While leaving OPEC is the first step to change, unless Angola makes radical changes to its fiscal system, it will still struggle to incentivise investment and grow output.”

OLE HANSEN, SAXO BANK:

“The producer has increasingly been showing discontent with the OPEC+ production straitjacket and favouritism towards Middle East producers.”

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