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Angola Quits OPEC amidst Dispute over Oil Quotas

  • 26 Dec 2023

Recently, Angola has announced its departure from OPEC after 16 years of membership due to disagreements over oil production quotas.

  • The move follows Luanda's rejection of a reduced output limit imposed by OPEC leaders to reflect the country's declining capacity.

Key Points

  • Reduced Output Limit Dispute: Angola rejected a lowered output limit, leading to tensions within OPEC. The country's output has dwindled, prompting disagreements with OPEC leaders over production quotas.
  • No Impact on Supply Forecasts: Experts emphasize that Angola's departure won't impact supply forecasts, as the nation is already producing at full capacity and not limited by OPEC quotas.
  • Impact on OPEC Membership: Angola's exit reduces OPEC's membership to 12 nations. OPEC, led by Saudi Arabia, has been curbing supplies to stabilize global oil prices.
  • Decline in Angola's Output: Over the past eight years, Angola's oil output has declined by about 40% to around 1.14 million barrels per day due to insufficient investment in aging, deepwater oil fields.
  • Dispute Escalation: The clash escalated, leading to OPEC delaying its ministerial meeting by four days. Angola, seeking a higher quota, faced a reduced limit for 2024, further straining relations.
  • Collapse of Output Review: External consultants' review resulted in a lower quota of 1.1 million barrels per day for Angola, below its current output, leading to the country's rejection.
  • Ongoing Supply Challenges: OPEC's efforts to stabilize prices face challenges from rising production in non-OPEC nations, including the United States.
  • Concerns About Group Cohesion: Angola's departure adds to concerns about the cohesion of OPEC, with previous departures including Qatar, Indonesia, and Ecuador.
  • Surge in Non-OPEC Production: While OPEC's supply has decreased, production from non-OPEC nations, particularly the U.S., has surged, impacting the group's ability to support prices.
  • Global Impact on Crude Prices: Crude prices experienced a 1.5% decline, trading below $79 a barrel, as traders reacted to the news, signalling potential concerns about OPEC's unity.