In a significant move, Angola has declared its departure from the Organization of the Petroleum Exporting Countries (OPEC) following the recent reduction in its oil production cap imposed by the organization. Last month, OPEC, comprising oil-exporting developing nations, decided to lower Angola’s oil production ceiling, prompting the country to reconsider its membership.
Angola has grappled with a decline in oil production for almost two decades, as reported by Abhi Rajendran, the director of oil markets research at Energy Intelligence. Rajendran noted that Angola’s oil production, which once reached approximately 2 million barrels per day in the mid-2000s, has now dwindled to around 1 million barrels per day.
The reduction in oil output has resulted in Angola consistently failing to meet its OPEC production quota. Despite this, the decision to exit the organization is a strategic one, according to Viktor Katona, the head of oil analysis at Kpler. Katona emphasized that Angola prioritizes its long-term future over conforming to a potentially restrictive new production cap set by OPEC.
While Angola’s departure may not significantly impact OPEC’s overall oil supply due to its relatively modest production levels, it does pose a challenge to the organization’s unity and reputation. Katona highlighted that the move signals a willingness to leave the organization if dissatisfaction with OPEC’s policies persists.
The decision by Angola to exit OPEC marks a decline in the organization’s share of the global oil market. Currently holding 27% of the market, OPEC’s influence has diminished from almost 35% over a decade ago. This shift underscores the evolving dynamics within OPEC and the challenges it faces in maintaining cohesion among its member nations.