In a significant development, Angola, the 17th largest oil producer globally and Africa’s second-largest after Nigeria, has opted to exit the Organization of the Petroleum Exporting Countries (OPEC). This decision, revealed after a prolonged disagreement over production quotas, swiftly triggered a decline in crude oil prices by over a dollar. Analysts anticipate an increase in production by Angola’s state-owned oil company, Sonangol, contributing to this market shift.
Angola now joins an exclusive group of countries that have departed from OPEC, alongside Qatar in 2018 and Ecuador in 2020.
OPEC, a coalition of 12 major oil-exporting nations, wields substantial influence over global oil supplies. Collaborating with non-OPEC members, including Russia, in what is known as OPEC+, the organization has the power to adjust production quotas, profoundly influencing the international economy. The group aims to regulate oil supply, striving to maintain prices at a strategic level to stimulate demand and generate substantial profits.
The decision by Angola to withdraw from OPEC stems from several factors. Primarily, it reflects the increasing politicization of OPEC and a misalignment of geopolitical goals with Angola’s developmental needs. OPEC+, in recent years, has engaged in significant oil production cuts, effectively transforming into a joint Russian-Saudi political initiative. While these production cuts tend to elevate oil prices, the benefits primarily accrue to economically insulated Saudi Arabia, using OPEC as a political tool against regional rivals and Iran, and Russia, which benefits from higher prices per barrel due to production constraints.
For many OPEC members, especially Angola, this approach does not align with their interests. The advantages of increased competition and higher export volumes outweigh the benefits of elevated oil prices, which often pose challenges for these governments. Consequently, internal discord within OPEC has reached levels not seen since the 1973 oil embargo.
Domestic considerations have also played a pivotal role in Angola’s departure from OPEC. Investigations into Isabel Dos Santos, a prominent businesswoman and daughter of the former Angolan president José Eduardo dos Santos, implicated OPEC in a corruption scheme, leaving Sonangol with a meager $309 in its bank account. Concurrently, political changes within Angola, marked by a closely contested election, have prompted the ruling Movement for the Popular Liberation of Angola to distance itself from corruption allegations and prioritize economic liberalization.
Surprisingly, both the United States and China have tentatively supported Angola’s decision to exit OPEC. While historical tensions between the U.S. and the MPLA in the Cold War era have thawed, recent agreements at the December 2022 African Leaders Summit and increased U.S.-Angolan investment indicate a warming of relations. China, once a supporter of MPLA’s rival UNITA, now embraces Angola through its Belt and Road Initiative, fostering economic cooperation.
The departure of Angola from OPEC aligns with both U.S. and Chinese interests in securing a stable and cost-effective energy supply. The ultimate impact of this move on either side remains uncertain, but it underscores the importance of strategic commitment and active engagement by the U.S. in ensuring its goals in southern Africa and maintaining a robust oil supply.